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Rebalancing Your Balanced Portfolio: BMO Global Asset Management Insights

Latest white paper makes the case for incorporating alternatives in traditional 60/40 equity/bond portfolio split

CHICAGO, ILLINOIS--(Marketwired - April 18, 2016) - BMO Global Asset Management has released its latest white paper, titled "Finding a new balance with alternatives." The paper considers the evolution of the traditional 60/40 equity/bond balanced portfolio split over the past several decades and concludes that, given the current market environment, investors should consider including alternative strategies to generate potentially stronger returns.

Alternative investments feature a diverse group of strategies and management styles. Among those often included within liquid alternatives mutual funds are equity hedge, credit, relative value and macro-driven tactics. Combined within a multi-manager fund, the overall objective typically emphasizes absolute returns - relying less on the direction of markets to meet investor goals.

"Alternatives are an increasingly popular investment choice, having grown from around $50 billion in assets in 2006 to more than $300 billion in 2015," said Lowell Yura, Head of Multi-Asset Solutions, BMO Global Asset Management. "Until recently, retail investors have had limited access to alternative strategies and, as a result, may not be very familiar with these types of investments and how they can add value. This relatively new access - combined with a wide range of strategies that are now available - has created a need for clarity, proper selection and portfolio construction. A multi-strategy approach, which provides exposure to a wide selection of alternative investments, can help investors and financial advisors navigate this asset class efficiently."

To justify an allocation to alternatives, the paper points to a significant shift in the traditional 60/40 equity/bond portfolio construction paradigm that has traditionally relied on strong bond returns in a low volatility environment. In the paper, BMO Global Asset Management contends that historical returns are unlikely to be replicated in the current low yield environment. The firm predicts that even moderate risk balanced portfolios should expect more than a four percent decrease in returns over the next ten years compared to what a 60/40 portfolio delivered in the last 35 years.

"To meet today's diversification and return expectation challenges, investors will need to consider investments that utilize unique strategies or new market exposures," said Kristina Kalebich, Senior Alternatives Specialist/Co-Portfolio Manager, BMO Global Asset Management. "A good alternatives option should either give the portfolio a higher return for the same amount of risk, or the same return for a lower amount of risk. Our research indicates best practice may be to compile a complementary blend of active alternative managers and multi-alternative strategies to make the most out of diversification opportunities."

The firm concludes that alternative strategies are best managed from a holistic, total portfolio perspective, considering the available alternative vehicles and how they correlate to one another. The multi-manager investment team can screen and monitor large numbers of potential managers, separating market exposure from identifiable manager skill. They also construct alternative asset allocations that combine the expertise of several managers to deliver breadth and differentiation - coming together, by design, to serve as a complement to the traditional 60/40 portfolio.

To read the complete white paper, visit

For more information on BMO Global Asset Management, visit, or on the BMO Alternative Strategies Fund, visit

About BMO Global Asset Management

BMO Global Asset Management is a global investment manager delivering service excellence from 27 offices in 17 countries to clients across five continents. Including discretionary and nondiscretionary assets, BMO Global Asset Management had CDN $304 billion in assets under management as of January 31, 2016.

Our four major investment centres in Toronto, Chicago, London and Hong Kong are complemented by a network of world-class boutique managers strategically located across the globe: BMO Real Estate Partners, LGM Investments, Monegy, Inc., Pyrford International Ltd., and Taplin, Canida & Habacht, LLC. BMO Global Asset Management has operations throughout North America and Europe, as well as in Abu Dhabi, Beijing, Shanghai, Hong Kong, Melbourne and Sydney and is a signatory of the United Nations-supported Principles for Responsible Investment initiative (UNPRI).

BMO Global Asset Management is a part of BMO Financial Group, a highly diversified financial services provider based in North America with total assets of CDN $699 billion as of January 31, 2016, and close to 47,000 employees.


All investments involve risk, including the possible loss of principal. Investments in alternative investments are subject to greater risk.

This is not intended to serve as a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect our judgment at this date and are subject to change. Information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy. This press release may contain forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology such as "may", "should", "expect", "anticipate", "outlook", "project", "estimate", "intend", "continue" or "believe" or the negatives thereof, or variations thereon, or other comparable terminology. Investors are cautioned not to place undue reliance on such statements, as actual results could differ materially due to various risks and uncertainties. This publication is prepared for general information only. This material does not constitute investment advice and is not intended as an endorsement of any specific investment. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek advice regarding the appropriateness of investing in any securities or investment strategies discussed in this press release and should understand that statements regarding future prospects may not be realized. Investment involves risk. Market conditions and trends will fluctuate. The value of an investment as well as income associated with investments may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance.

BMO Global Asset Management is the brand name for various affiliated entities of BMO Financial Group that provide investment management and trust and custody services. Certain of the products and services offered under the brand name BMO Global Asset Management are designed specifically for various categories of investors in a number of different countries and regions and may not be available to all investors. Products and services are only offered to such investors in those countries and regions in accordance with applicable laws and regulations. BMO Financial Group is a service mark of Bank of Montreal (BMO).

You should consider the Fund's investment objectives, risks, charges and expenses carefully before investing. For a prospectus, which contains this and other information about the BMO Funds, call 1-800-236-3863. Please read it carefully before investing.

BMO Asset Management Corp. is the investment adviser to the BMO Funds. BMO Investment Distributors LLC is the distributor of the BMO Alternative Strategies Fund. Member FINRA/SIPC. BMO Funds are not marketed or sold outside the United States.

For further information:
Media Contacts:
Nini Krishnappa
(416) 867-3996

Anthony Massucci
Sunstar Strategic
(917) 842-2186