Toronto-based BMO Investments Inc. (BMOI) has announced a series of change to its investment funds that include an adjustment in investment strategy for some products and amendments to the prospectus documents of the firm’s BMO Global Tax Advantage Funds.
As a result of these changes, BMO Balanced Yield Plus ETF Portfolio and BMO Fixed Income Yield Plus ETF Portfolio will now invest up to 75% of their assets in foreign securities, according to the announcement released late on Thursday.
Another modification in investment strategy is now applicable to BMO Bond Fund, BMO Core Bond Fund and BMO Core Plus Bond Fund, the firm’s announcement states: “[Portfolio managers] may now implement dynamic positioning investment strategies on the yield curve by actively trading different types of securities. This trading may increase the turnover rate of these funds. The higher the portfolio turnover rate, the greater the possibility that unitholders in these funds will receive income or taxable capital gains.”
In addition, amendments will be made to prospectus documents for all classes of BMO Global Tax Advantage Funds, a line of corporate-class funds, to reflect changes in Canadian tax laws. These changes eliminated the tax benefits associated with forward agreements used by certain investment funds to achieve capital gains treatment on investment returns that would otherwise be treated as income for tax purposes.
“As a result, BMOI is no longer able to use this type of structure to reduce the amount of income generated by BMO Global Tax Advantage Funds Inc. (the corporation),” the announcement states. “Accordingly, there is a greater likelihood for the corporation, and mutual fund corporations similar to it, to pay income tax.”
The firm is also reminding financial advisors and investors that registered accounts are still restricted from purchasing the following Global Tax Advantage Funds:
- BMO Asian Growth and Income Class
- BMO International Value Class
- BMO Global Dividend Class
- BMO SelectClass Income Portfolio
- BMO SelectClass Balanced Portfolio
- BMO SelectClass Growth Portfolio
- BMO SelectClass Equity Growth Portfolio
- BMO Income ETF Portfolio Class
- BMO Balanced ETF Portfolio Class
- BMO Growth ETF Portfolio Class
- BMO Equity Growth ETF Portfolio Class
The prospectus for all Global Tax Advantage Funds is also being amended to indicate that investors should consider these funds if they are investing in a non-registered account and want the flexibility to switch to another class of those funds without realizing capital gains.