- Bank of Montreal’s (TSX:BMO) BMO Asset Management Inc., the manager of the BMO ETFs and Canada’s largest fixed income ETF provider, has launched three new BMO Target Maturity Bond ETFs
- These ETFs can combine the benefits of traditional bond ETFs, such as diversification and professional management, with the advantages of individual bonds, including a defined term to maturity
- This combination may help investors with goal setting or matching maturity dates with investment time horizons, such as funding post-secondary education or saving for a major purchase like a home
- BMO stock (TSX:BMO) opened at C$139.43
Bank of Montreal’s (TSX:BMO) BMO Asset Management Inc., the manager of the BMO ETFs and Canada’s largest fixed income ETF provider, has launched three new BMO Target Maturity Bond ETFs. These ETFs can combine the benefits of traditional bond ETFs, such as diversification and professional management, with the advantages of individual bonds, including a defined term to maturity. This combination may help investors with goal setting or matching maturity dates with investment time horizons, such as funding post-secondary education or saving for a major purchase like a home.
The newly launched BMO Target Maturity Bond ETFs are designed to minimize reinvestment risk, a common issue with traditional target maturity bond ETFs. Traditional ETFs can be subject to the risk that proceeds from maturing bonds will be reinvested at unknown future interest rates. In contrast, BMO Target Maturity Bond ETFs aim to provide income for a fixed period during the year of maturity and lock in interest rates for the final year of maturity using derivatives.
“The BMO Target Maturity Bond ETFs give investors another fixed income option, allowing them to tailor their overall mix of fixed income investments more effectively,” Matt Montemurro, head of fixed income and equity index ETFs, BMO Global Asset Management, said in a news release. “BMO Target Maturity Bond ETFs offer investors a bond-like experience with the liquidity and diversification benefits of an ETF.”
The three new BMO Target Maturity Bond ETFs are:
- BMO Target 2027 Canadian Corporate Bond ETF (TSX: ZXCO)
- BMO Target 2028 Canadian Corporate Bond ETF (TSX: ZXCP)
- BMO Target 2029 Canadian Corporate Bond ETF (TSX: ZXCQ)
Each of these ETFs has closed its initial offering of exchange traded units and is now listed and trading on the Toronto Stock Exchange.
The BMO Target 2027 Canadian Corporate Bond ETF seeks to provide income for a limited period ending on or about November 19th, 2027, by investing primarily in investment-grade debt instruments of Canadian issuers with an effective maturity in 2027. It uses derivatives to implement a hedging strategy designed to minimize reinvestment risk in 2027.
Similarly, the BMO Target 2028 Canadian Corporate Bond ETF aims to provide income until November 24, 2028, and the BMO Target 2029 Canadian Corporate Bond ETF until November 30th, 2029, both employing strategies to minimize reinvestment risk through the use of derivatives.
Further information can be found at the BMO ETF Centre.
Commissions, management fees, and expenses may be associated with investments in exchange traded funds. Please read the ETF Facts or prospectus of the BMO ETF before investing. Exchange traded funds are not guaranteed, their values change frequently, and past performance may not be repeated.
BMO ETFs trade like stocks, fluctuate in market value, and may trade at a discount to their net asset value, which may increase the risk of loss. Distributions are not guaranteed and are subject to change and/or elimination.
BMO ETFs are managed by BMO Asset Management Inc., which is an investment fund manager and a portfolio manager, and a separate legal entity from Bank of Montreal.
All investments involve risk. The value of an ETF can go down as well as up, and you could lose money. The risk of an ETF is rated based on the volatility of the ETF’s returns using the standardized risk classification methodology mandated by the Canadian Securities Administrators. Historical volatility doesn’t predict future volatility. An ETF with a risk rating of “low” can still lose money. For more information about the risk rating and specific risks that can affect an ETF’s returns, see the BMO ETFs’ simplified prospectus.
BMO is the eighth-largest bank in North America by assets with C$1.4 trillion as of April 30, 2024. The bank has been operating for more than 200 years and serves more than 13 million customers across Canada, the United States and select international markets.
BMO stock (TSX:BMO) opened more than a per cent lower at C$139.43, but it is up 6.50 per cent since this time, last year.
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(Top photo generated with AI.)
