News Releases
BMO Investments Inc. today launched BMO LifeStage Plus Funds, a unique investment option that helps investors save for specific long-term goals, such as a child's education or retirement.
BMO LifeStage Plus Funds are similar to the relatively new, and increasingly popular, life cycle funds now available throughout North America. Demand for life cycle funds in the U.S. has been particularly strong, with assets growing at a pace of 340 per cent between 2004 and 2006, compared to the 40 per cent growth rate of the rest of the fund industry.*
In contrast to traditional mutual funds, life cycle funds have “target end dates” – the day the fund will end or mature. As this date approaches, the overall asset allocation of the fund automatically adjusts to become more conservative. This helps investors take advantage of market growth opportunities early on in their investments, while protecting the value of the fund as it gets closer to maturity.
What makes BMO's new funds unique is that for the first time in Canada these funds will also include a daily lock-in feature. This means that investors will receive the highest daily value during the life of the fund if they remain fully invested in the fund until its target end date.
Investors simply select one of four portfolios (based on target end dates of 2015, 2020, 2025 and 2030) that best coincides with their savings goal. The portfolio will then be adjusted over the life of the fund, and rebalanced to maintain the appropriate asset mix. As long as investors remain fully invested until the fund has reached its target end date, they will receive the Guaranteed Maturity Amount: the highest daily unit value in the fund's history (at minimum their initial investment).
“ The built-in asset class rebalancing feature is well suited for investors who want a simple, well-diversified portfolio that they don't have to worry about after they determine which maturity date works best for them,” said Ed Legzdins, President and CEO, BMO Investments Inc. “The maintenance-free portfolio simplifies investing - it helps investors limit downside risk the closer they are to needing the money, which allows them to confidently plan for the significant milestones in their lives.”
How BMO LifeStage Plus Funds work
BMO LifeStage Plus Funds provide investors with a professionally managed, globally diversified portfolio, made up of BMO Mutual Funds and/or a fixed income component. Each of the BMO LifeStage Plus Funds will provide exposure to a range of the following BMO Mutual Funds at various points during the life of the fund: BMO Dividend Fund, BMO U.S. Equity Fund, BMO International Equity Fund and BMO Monthly Income Fund.
The equity component provides the funds with growth potential and the fixed income component provides the funds with downside protection as the funds near their target end dates. The asset mix will be monitored daily and will gradually shift, based on market conditions and time to maturity, to fixed income securities by the funds' target end dates. Together, these two components offer clients growth potential with a Guaranteed Maturity Amount.
Investors can purchase units in the fund at any time at the fund's current unit value and will still receive the highest daily unit value in the fund's history. If investors redeem units prior to maturity, they will receive the fund's unit value at the time of redemption.
BMO Investments Inc.
BMO Investments Inc. is a member of the BMO Financial Group and part of the organization's Private Client Group. The Private Client Group provides integrated wealth management services in Canada and the United States and had total assets under management and administration and term investments of $299.86 billion as at April 30, 2007.
*As of December 31, 2006, according to Investment Company Institute (ICI), the national association of U.S. investment companies
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