BMO subsidiary in UK will manage new global balanced fund

Rudy Luukko 13 November, 2014 | 1:00PM
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BMO Investments Inc. today launched a global balanced fund that will be managed by a large British-based firm that parent Bank of Montreal acquired in May.

Calling the shots for BMO Global Balanced is F&C Management, a wholly owned bank subsidiary based in London. F&C has an estimated $150 billion (GBP83 billion) under management.

F&C will take an active approach to asset allocation between asset classes. The portion of the new mutual fund held in equities will vary, depending on F&C's economic and market outlook. Within the Global Balanced category, BMO Global Balanced provides a fully actively managed alternative to BMO's various fund-of-funds portfolios that invest in exchange-traded funds.

Within the equity portion, the fund will invest in a wide range of market capitalizations. The portfolio managers will employ fundamental analysis to invest in companies that they conclude are trading at discounts to their intrinsic value.

The fixed-income portion will invest in government, corporate and structured-finance issuers, and will be able to hold both investment-grade and non-investment-grade issues.

BMO Global Balanced was one of five new BMO mutual funds launched today. The others are:

BMO U.S. Equity Plus: This fund's mandate is to invest mostly in high-quality, large-cap U.S. and Canadian companies. Up to 10% of the fund's assets may be held in securities of issuers domiciled outside of North America. BMO Asset Management, the portfolio manager, expects to add its New York affiliate BMO Capital Markets Corp. as a sub-advisor by the end of this year.

BMO U.S. Dividend: Also managed by another affiliate, Chicago-based BMO Asset Management Corp., this fund is the Canadian-dollar version of the existing BMO U.S. Dollar Dividend. It will make quarterly income distributions.

BMO Core Plus Bond: This fund will have Canadian investment-grade government and corporate bonds as core holdings, while also investing in securities that are below investment grade. Foreign fixed-income securities will also be held, and according to the prospectus will typically not exceed 40% of fund assets.

BMO Core Bond: Investing primarily in Canadian investment-grade government and corporate bonds, this fund may also hold smaller portions in foreign and non-investment-grade securities. According to the prospectus, the fund will typically invest no more than 30% of its assets in foreign securities. Both of the new bond funds will be managed internally by BMO Asset Management, and will make monthly income distributions.

Each of the five new funds is available in no-load Series A, the Advisor Series with several purchase options, the fee-based Series F and Series D for discount-brokerage clients.

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About Author

Rudy Luukko

Rudy Luukko  Rudy Luukko is a freelance writer who contributes to Morningstar.ca on topics involving fund industry trends and regulatory issues. He retired in May 2018 from his position as editor, investment and personal finance, at Morningstar Canada, where he had worked since 2004. He has also worked as an editor and writer for various general, specialty and institutional media, and he has co-authored courses for the Canadian Securities Institute. Follow Rudy on Twitter: @RudyLuukko.

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