The website
Description
The website for BMO Mutual Funds® is . It is divided into five main sections: Funds, Products & Services, Education Centre, News & Research and Customer Service.
The Funds section:
- talks about why investors should buy BMO funds in “About Our Funds”,
- explains the various ways the funds can be purchased in “How to Buy Funds”,
- details all the available funds (e.g. BMO T-Bill Fund, BMO Bond Fund, etc.) by classifying them according to their classes (e.g. Security Funds, Income Funds, etc.) under “Our Fund Family”
- and provides information related to all funds (Daily Fund Prices, Fund Performance, Management Fees / MERs / NAVs and Historical Prices) under “All BMO Mutual Funds”.
The Products & Services section contains links to:
- some specific types of funds such as BMO Global Tax Advantage Funds, BMO Air Miles Money Market Fund and U.S. Dollar Funds,
- other BMO investment services, such as the BMO MatchMaker Strategic Investment Service, BMO CutomSelect, Continuous Savings Plan and advice services under Getting Advice
- and to plans that can incorporate the funds, such as RESPs, RRSPs, RRIFs, Non-registered Investments and Group Pensions.
The Education Centre educates investors about:
- Mutual Fund Basics,
- Investment Tips,
- Market Volatility,
- Realistic Expectations,
- Mutual Funds and taxes,
- Understanding T3s,
- International Diversification
and provides further support under Getting Advice.
News & Research :
- talks about What’s New at BMO Mutual Funds,
- details retirement, successful investing, partnership and planned investing, diversification and monthly income strategies under Investment Strategies and Mutual Funds,
- provides future outlook and analysis through publications of BMO Financial Group – Economics Department, such as the Monthly North American Outlook, Canada’s Regional Outlook and the Sectoral Outlook – Prospects for Canada’s Industries
- and contains a link to an archive of BMO Mutual Funds™ ONTarget™ monthly newsletter.
The Customer Service area of the website provides links to other BMO sites Customer Service links such as:
- Getting Advice,
- Contact Us,
- Account Services
- and e-Newsletter Subscribe.
The website also has main links a Site Map, Glossary, Reports and Prospectuses and Legal information posted by the company.
Review
The website is very extensive and detailed, but all the information is divided into sections and then subsections with links in a very effective manner. In fact, it is a more effective source of information than calling the BMO Investment Centre.
Essential material such as the Annual Report, Simplified Prospectus, Portfolio Profiles, Quarterly Disclosures, The Management’s Report and Proxy Voting Records can be conveniently accessed through the site. The education component of the site is very helpful for research and answers some of the most important questions about investing into mutual funds.
The website eliminates the need to go to other financial information sites for BMO products, as it has up to date figures and statistics regarding all these products. A lot of past information can also be accessed though the handy archives the site provides.
The contact options pages provide a complete list of ways to get in touch with BMO, thereby reducing the need to look for such information on separate pages.
Marketing material
While BMO Investment Inc. is not consistently regular in its advertisement through television, it does engage in producing TV commercials to a fair degree. It also advertises quite a bit online, on popular websites such as .
BMO produces a free monthly e-newsletter called ONTarget™, which provides investors investment tips and tricks. A copy of the latest February, 2007 issue is included in Appendix A. This issue features an article on international diversification called “Broaden your Investment Horizons” which can be found under the Perspectives section. It also answers one chosen subscriber’s question for the month under the Ask an Expert section. Then it talks about “The Importance of an Annual Review” for one’s portfolio under the Did You Know? section. The newsletter is concise and to the point, but offers a good range of up to date investment knowledge.
BMO also frequently publishes a host of different brochures and pamphlets that can be found at any Bank of Montreal branch. One of the latest pamphlets lists why a person should consider talking to a BMO Account Manager to establish both a personal investment strategy and ways to maximize one’s business investments. Another such pamphlets briefly details some main RSP strategies that contribute towards retiring successfully, such as the importance of contributing regularly, borrowing to invest and spousal RSP / income splitting. The largest marketing brochure BMO publishes is its quarterly “Investment Strategies and Mutual Funds” brochure, the latest Winter 2007 issue of which talks about things like being ready for retirement, how much income different levels of savings produce, RSP deadline reminders and suggestions, and portfolio diversification. All this material offers a good variety of the different aspects that there are to investing. Copies for all these can be found in Appendix A, at the end of the report.
Aside from all this, there are marketing components to other BMO publications as well, such as its Semi-Annual Report, Annual Report, Annual Information Form, (monthly) “Fundfacts” report, Quarterly Portfolio Disclosure and The Management Report of Fund Performance.
Prospectus
The Simplified Prospectus for BMO Mutual Funds® contains details for all the funds offered by BMO. It groups together funds with similar risk characteristics and starts off by providing a general description of each group. It then provides details for every fund in the group, such as basic specifics, whether the fund is RSP eligible, the management fees and the name of the portfolio manager.
Then it lists what the fund invests in by talking about the fund’s investment objectives, strategies, use of derivatives, currency hedging strategies and repurchase and reverse repurchase transactions and securities lending.
Next are the risks of investing in the fund, followed by a description of the kind of investor the fund caters to and how it could fit into the investor’s portfolio.
The distribution policy is outlined after that, stating how often an investor will receive payments of income, dividends or capital gains and any reinvestment policies that are in place.
The prospectus then shows any fund expenses indirectly borne by investors, by providing a hypothetical example that compares such costs for BMO funds with those of investing in other mutual funds. The example determines the expenses one would incur if one invested $1,000 in the fund for the specific time periods shown, the fund earned an assumed rate of 5% each year and the fund’s MER was the same in all periods as it was reported in its last financial year.
The last section of the prospectus gives some general information common to all BMO funds, such as what mutual funds are, how they are structured, what the common risks of investing in them are, a guide to buying / switching / redeeming them, types of dealer compensation, income tax considerations and the legal rights all investors have. A copy of the index of contents of the BMO Mutual Funds® Simplified Prospectus is in Appendix C of the report.
Competitiveness
BMO has consistently ranked among the top five banking institutions in Canada for decades, and was ranked as Canada’s Best Corporate Citizen in 2005 by Corporate Knights Magazine. In 2006, IR Global Rankings declared the company’s series of investor relation websites as number one worldwide in the category of financial services. On January 9, 2007, DALBAR (one of the leading financial services research firms in North America) pronounced BMO Mutual Funds™ as the winner of its 2006 Mutual Fund Service Award for providing the best overall service to both English speaking and French speaking investors over the past year, as indicated in the BMO news release included in Appendix B of the report.
BMO also offers its clients and potential investors incentives to invest in BMO products through different contests and promotions. One such contest that ended recently was the BMO Skating contest, which gave customers the chance to win all expense paid trips to the 2007 World Figure Skating Championships which will take place in Tokyo, Japan during March, 2007. Another contest that is taking place currently is the “Go your own way” giveaway. One can enter automatically by becoming a BMO InvestorLine client and can win prizes ranging from sailing trips in Croatia, to tickets for the 2008 Ryder Cup, to winning the services of a personal chef. A copy of the pamphlet for this contest can be found in Appendix B included with the report.
BMO Mutual Funds™ are quite competitive due to the wide variety of funds (over 47 different funds) that they offer investors. Management of these funds is divided amongst ten different wealth management firms. They are supplemented by extensive customer support and feature some of the most attractive pricing, fee and expense structures in the industry.
The telephone interview that I conducted with a BMO Investment Centre representative on February 15, 2007 gave me a good indication of the company’s selling strategy. The BMO representative asked me questions to determine the suitability for me of the specific funds that I inquired about, and then explained not just those funds but what other products would be better suited for me as an investor. The manner of trying to sell these funds was not overly aggressive as the representative took the time to fully understand my questions, yet she seemed very knowledgeable about the products and did not hesitate to go into details when she felt that a particular fund would be of interest to me.
FUND KNOWLEDGE
FUND HIGHLIGHTS
The following table (Fig. 2) provides a list and basic data of all BMO Mutual Funds (excluding strategic funds) as of January 31, 2007.
Fig. 2
The table below (Fig. 3) shows the latest fund prices, price changes and percentage returns for all BMO Mutual Funds (excluding strategic funds).
Fig. 3
TOP PERFORMING FUNDS
The top four performing BMO Mutual Funds, according to their 3 year percentage returns as of January 31, 2007, are shown in the following table (Fig. 4).
Fig. 4
1. BMO Resource
Description
The BMO Resource Fund was incepted in August 1993. It falls under the CIFSC category of Natural Resources funds and is an open-ended, 100 percent RRSP, RRIF and RESP eligible fund. Its total assets under administration are worth $250.18 million.
The fund has a “no load” type sales fee and its management expense ratio is 2.29%. The required initial regular and RRSP minimum investment is $500, and any subsequent regular and RRSP minimum investment is $50. The investment manager operating the fund for BMO Investment Inc. is Bill Belovay of Jones Heward Investment Counsel Inc., which is located at 77 King Street West, Suite 4200 in Toronto, Ontario.
As of March 2, 2007, the fund recorded a closing price of $35.27 per unit and showed month to date returns of -2.49% and year to date returns of -1.94%.
Customers and risk
The type of customers that are likely to purchase this fund are those seeking the high growth potential of resource stocks and are comfortable with high levels of risk, specifically equity, liquidity, foreign investment, currency, derivative, securities transaction and industry concentration risk.
Competitor
The main competitor for the BMO Resource Fund is Mackenzie Financial Corporation’s Universal Wild Resource Class Fund. It was started in October, 2000 and now holds $77.77 million in net assets and is an open ended, RRSP eligible fund with a 2.64% MER and initial sales fees. The required regular and RRSP minimum initial and subsequent investments are $500 and $100 respectively.
As of March 2, 2007, the current price for the fund is $36.08 per unit, with month and year to date returns of -1.89% and 0.53% respectively.
Comparison with competitor
The BMO Resource Fund is much larger in terms of net assets under management ($250.18 million) than the Mackenzie fund. It also does not charge sales / commission fees while Mackenzie does for its fund, and the BMO MER is lower than Mackenzie’s. Also, the BMO Resource Fund has outperformed its Mackenzie counterpart in terms of 1, 3 and 5 year returns (14.99%, 30.45% and 26.31% respectively as compared to 12.50%, 24.71% and 21.59%). Both funds are 4 star funds according to the rating system on .
2. BMO Special Equity
Description
The BMO Special Equity Fund was incepted in August 1993. It falls under the CIFSC category of Canadian Small Capital Equity funds and is an open-ended, 100 percent RRSP, RRIF and RESP eligible fund. Its total assets under administration are worth $344.26 million.
The fund has a “no load” type sales fee and its management expense ratio is 2.43%. The required initial regular and RRSP minimum investment is $500, and any subsequent regular and RRSP minimum investment is $50. The investment manager operating the fund for BMO Investment Inc. is Lesley Marks of Jones Heward Investment Counsel Inc., which is located at 77 King Street West, Suite 4200 in Toronto, Ontario.
As of March 2, 2007, the fund recorded a closing price of $33.54 per unit and showed month to date returns of -1.65% and year to date returns of 1.96%.
Customers and risk
The type of customers that are likely to purchase this fund are those looking to invest in smaller Canadian companies with high growth potential and are comfortable with medium to high levels of risk, specifically equity, liquidity, foreign investment, currency, derivative and securities transaction risk.
Competitor
The main competitor for the BMO Special Equity Fund is Northwest Mutual Funds Inc.’s Specialty Equity Fund. It was started in March, 1986 and now holds $230.54 million in net assets and is an open ended, RRSP eligible fund with a 2.66% MER and initial sales fees. The required regular and RRSP minimum initial and subsequent investments are $500 and $50 respectively.
As of March 2, 2007, the current price for the fund is $32.75 per unit, with month and year to date returns of -0.81% and 5.07% respectively.
Comparison with competitor
The BMO Special Equity Fund is larger in terms of net assets under management ($344.26 million) than the Northwest fund ($230.54 million). It also does not charge sales / commission fees while Northwest does for its fund, and the BMO MER is lower than Northwest’s. Also, the BMO Special Equity Fund has outperformed its Northwest counterpart in terms of 1 and 3 year returns (9.19% and 21.01% respectively as compared to 6.31% and 19.01%), while Northwest has better 5 year returns (25.51%) than BMO’s (15.94%). The BMO fund has been given a 4 star ranking by while the Northwest fund is rated at 3 stars.
3. BMO Emerging Markets
Description
The BMO Emerging Markets Fund was incepted in October, 1994. It falls under the CIFSC category of Emerging Markets Equity funds and is an open-ended, 100 percent RRSP, RRIF and RESP eligible fund. Its total assets under administration are worth $126.32 million.
The fund has a “no load” type sales fee and its management expense ratio is 2.83%. The required initial regular and RRSP minimum investment is $500, and any subsequent regular and RRSP minimum investment is $50. The investment manager operating the fund for BMO Investment Inc. is Edward D. Baker III of Alliance Bernstein Investment Management, which has its main head office at 1345 Avenue of the Americas in New York, USA.
As of March 2, 2007, the fund recorded a closing price of $13.36 per unit and showed month to date returns of -1.39% and year to date returns of -2.33%.
Customers and risk
The type of customers that are likely to purchase this fund are those looking to invest in the high growth potential of emerging markets, to diversify their international holdings with investments in countries not usually found in core international equity funds and are comfortable with high levels of risk, specifically equity, liquidity, foreign investment, currency, interest rate, credit, derivative and securities transaction risk.
Competitor
The main competitor for the BMO Emerging Markets Fund is Mackenzie Financial Corporation’s Universal Emerging Markets Class Fund. It was started in August, 2002 and now holds $86.41 million in net assets and is an open ended, RRSP eligible fund with a 2.66% MER and initial sales fees. The required regular and RRSP minimum initial and subsequent investments are $500 and $100 respectively.
As of March 2, 2007, the current price for the fund is $13.43 per unit, with month and year to date returns of -1.67% and -2.97% respectively.
Comparison with competitor
The BMO Emerging Markets Fund is larger in terms of net assets under management ($126.32 million) than the Mackenzie fund ($86.41 million). It also does not charge sales / commission fees while Mackenzie does for its fund, but the BMO MER is higher than Mackenzie’s. Also, the BMO Emerging Markets Fund has been outperformed by its Mackenzie counterpart in terms of 6 month, 1 year and 3 year returns (25.42%, 17.74% and 20.45% respectively for BMO as compared to 28.58%, 21.41% and 22.88%). The BMO fund has been given a 4 star ranking by while the Mackenzie fund is rated higher at 5 stars.
4. BMO International Index
Description
The BMO International Index Fund was started in March 1999. It falls under the CIFSC category of International Equity funds and is an open-ended, 100 percent RRSP, RRIF and RESP eligible fund. Its total assets under administration are worth $119.78 million.
The fund has a “no load” type sales fee and its management expense ratio is 1.10%. The required initial regular and RRSP minimum investment is $500, and any subsequent regular and RRSP minimum investment is $50. The investment manager operating the fund for BMO Investment Inc. is Gregory Chrispin of State Street Global Advisor, which is the Canadian subsidiary of State Street Corporation (located at State Street Financial Center, 1 Lincoln Street in Boston, USA).
As of March 2, 2007, the fund recorded a closing price of $10.35 per unit and showed month to date returns of -1.23% and year to date returns of -0.28%.
Customers and risk
The type of customers that are likely to purchase this fund are those looking to benefit from the growth potential of international equities, those who want an international fund that looks to match the performance of the MSCI – EAFE Index and are comfortable with medium levels of risk, specifically interest rate, equity, foreign investment, currency, derivative, securities transaction and index fund risk.
Competitor
The main competitor for the BMO International Index Fund is Capital International Asset Management – Canada’s International Equity B Fund. It was started in March, 2006 and now holds $385.22 million in net assets and is an open ended, RRSP eligible fund with a 2.32% MER and front-end load sales fees. The required regular and RRSP minimum initial and subsequent investments are $500 and $100 respectively.
As of March 2, 2007, the current price for the fund is $11.08 per unit, with month and year to date returns of -0.80% and 0.57% respectively.
Comparison with competitor
The BMO International Index Fund is smaller in terms of net assets under management ($119.78 million) than the Capital fund ($385.22 million). It also does not charge sales / commission fees while Capital charges up front for its fund, and the BMO MER is lower than Capital’s. Also, the BMO International Index Fund has been outperformed by its Capital counterpart since the latter’s inception, with 1, 3 and 6 month returns of 1.59%, 5.30% and 12.09% respectively as compared to 1.72%, 9.59% and 16.91%. The BMO fund has been given a 4 star ranking by while the Capital International Equity B Fund has not yet been rated.
5. BMO European
Description
The BMO European Fund came into being in October, 1994. It falls under the CIFSC category of European Equity funds and is an open-ended, 100 percent RRSP, RRIF and RESP eligible fund. Its total assets under administration are worth $149.08 million.
The fund has a “no load” type sales fee and its management expense ratio is 2.42%. The required initial regular and RRSP minimum investment is $500, and any subsequent regular and RRSP minimum investment is $50. The investment manager operating the fund for BMO Investment Inc. is Sharon E. Fay of Alliance Capital Management Canada Inc., a part of Alliance Bernstein (main head offices of which are located at 1345 Avenue of the Americas in New York, USA.
As of March 2, 2007, the fund recorded a closing price of $23.75 per unit and showed month to date returns of -1.25% and year to date returns of -1.15%.
Customers and risk
The type of customers that are likely to purchase this fund are those looking for exposure to the growth potential of securities offered by established Western European and United Kingdom based companies, and are comfortable with medium levels of risk, specifically equity, foreign investment, currency, interest rate, credit, derivative and securities transaction risk.
Competitor
The main competitor for the BMO European Fund is Altamira Investment Services Inc.’s European Equity Fund. It was started in May, 1993 and now holds $86.03 million in net assets and is an open ended, RRSP eligible fund with a 2.69% MER and no – load type sales fees. The required regular and RRSP minimum initial and subsequent investments are $1000 and $50 respectively.
As of March 2, 2007, the current price for the fund is $23.33 per unit, with month and year to date returns of -0.93% and 0.82% respectively.
Comparison with competitor
The BMO European Fund is larger in terms of net assets under management ($149.08 million) than the Altamira fund ($86.03 million). Both funds do not charge sales / commission fees, but the BMO MER is lower than Altamira’s. Also, the BMO European Fund has significantly outperformed its Altamira counterpart in terms of 1, 3 and 5 year returns (28.80%, 17.17% and 11.94% respectively as compared to 25.77%, 12.61% and 6.09%). The BMO fund has been given the highest ranking of 5 stars by while the Altamira fund is rated at 4 stars.
References
-
“Statistics” pages; ; February 19, 2007
-
“Mutual Fund Industry” pages; ; February 19, 2007
-
“Press Releases” pages; ; February 19, 2007
-
“Fund Category List” page; ; February 18, 2007
-
“The Changing Marketplace – Competition in the Canadian Financial Services Sector” page; ; February 18, 2007
- Telephone interview with BMO Investment Centre representative on February 15, 2007
- Visit to Bank of Montreal, Shopper’s World Mall, Brampton on March 2, 2007
-
“BMO e-Newsletters Archive” pages; ; March 3, 2007
-
“Go your own way giveaway” page; ; March 3, 2007
-
All sections; ; March 3, 2007
-
Various Fund Selector “Report for BMO Investments Inc.” pages; ; March 3, 2007
-
Various “BMO Fund Profile” pages; ; March 3, 2007
-
Various Fund Filter “Fund Report” pages; ; March 3, 2007
-
Various “Fund Profile” pages for other funds; ; March 3, 2007
Sources for the section: and
Source for entire section:
Source for entire section:
Determined after talking to a BMO Investment Centre Representative on February 15, 2007. Also, as advised by the same
Representative and a customer service representative at the Shopper’s World, Brampton Bank of Montreal Branch on March 2, 2007.
Source for rest of the section:
Source: BMO Mutual Funds® Simplified Prospectus obtained from Bank of Montreal, Shopper’s World, Brampton
Source: Telephone interview with BMO Investment Centre representative on February 15, 2007
Sources for the section: and
Source for the two sections:
Sources for the section: and
Source for the two sections:
Sources for the section: and
Source for the two sections:
Sources for the section: and
Source for the two sections:
Sources for the section: and
Source for the two sections:
