Bank of Montreal is rolling out 10 more exchange-traded funds as competition continues to heat up during the registered retirement savings plan (RRSP) season.
This launch, which boosts the bank's ETF offerings to 40, focuses on income and commodity themes "which are very topical to the Canadian investor," Kevin Gopaul, chief investment officer of BMO ETFs at BMO Asset Management Inc., said in an interview.
The income-oriented ETFs, which will be listed on the Toronto Stock Exchange on Thursday, include four portfolios of corporate bond ETFs, whose assets will shift into money market securities like Treasury bills as the maturity dates gets closer.
These products offer investors not only the diversification of a broad suite of corporate bonds, but also "access to our institutional bond pricing which is often a fraction of retail bond pricing," Mr. Gopaul said. "These ETFs allow investors to plan for future expenses or cash flow requirements, such as retirement, education costs and home purchases"
The portfolios include the BMO 2013 Corporate Bond Target Maturity ETF (ZXA), the BMO 2015 Corporate Bond Target Maturity ETF (ZXB), the BMO 2020 Corporate Bond Target Maturity ETF (ZXC) and the BMO 2025 Corporate Bond Target Maturity ETF (ZXD). These offerings have a management expense ratio of 0.30 per cent, which will decline as the maturity date nears.
These portfolios differ from the BMO LifeStage Plus, target-date mutual funds, which invest in a portfolio of both BMO equity and bond ETFs, with the asset mix becoming more conservative as the specified date nears, Mr. Gopaul said.
The other income offerings include the BMO Monthly Income ETF (ZMI), which will invest a portfolio of six of the highest-yielding BMO ETFs with 50 per cent in equities and 50 per cent in fixed-income investments. It has an MER of 0.55 per cent. The BMO Covered Call Canadian Banks ETF (ZWB) will generate monthly income using a strategy based on writing call options on a portfolio of Canadian banks. It has an MER of 0.65 per cent.
The bank also introduced four commodity ETFs based on the S&P Goldman Sachs Commodity Index, which tracks commodity futures .They include the BMO Energy Commodities Index ETF (ZCE), the BMO Agriculture Commodities Index ETF (ZCA), the BMO Precious Metals Commodities Index ETF (ZCP) and the BMO Base Metals Commodities Index ETF (ZCB). Their MER is 0.65 per cent.
BMO's ETF business has grown to $1.5-billion in 18 months. While Bank of Montreal mutual funds and its ETFs do invest in the BMO ETFs, less than half of the assets are generated from that source, Mr. Gopaul said.