Effective December 31, BMO 2013 Corporate Bond Target Maturity ETF (TSX:ZXA) will continue its operations as an exchange traded short-term bond fund as originally provided for in its prospectus, BMO Asset Management Inc. announced late last week.
This will enable investors to continue to hold their existing units as well as providing the opportunity for investors to purchase and sell units at their discretion instead of at a set termination date.
In connection with continuing ZXA past its target maturity date, the name of the ETF will will change to BMO Ultra Short-Term Bond ETF, and the ticker symbol will change to (TSX:ZST).
The portfolio holdings of ZST will focus on Canadian government and corporate bonds with a term of one year or fewer. The portfolio holdings of the fund may also include high yield bonds with a term of one year or fewer, and floating rate investments and preferred shares with less than a year to reset.
The management fee of the fund will be reduced from 19 bps to 15 bps; and the units of the fund will be consolidated on a one for four basis, which is expected to reduce trading costs.
“The ZXA changes will give investors a valuable portfolio tool to manage cash and short dated fixed income,” said Kevin Gopaul, senior vice president and chief investment officer, BMO AM, in a release.
“The multiple asset classes within BMO Ultra Short-Term Bond ETF are expected to enhance the overall yield. This diversification across asset classes brings meaningful innovation to short term ETFs by improving yield without concentrating risks. Additionally, the unit consolidation should make ZST even more appealing by making it more cost efficient to trade,” Gopaul concluded.
The ZXA changes will be effective on or about December 31. Units will begin trading on the Toronto Stock Exchange, under the new ticker symbol and on a consolidated basis, on or about Jan. 3, 2014.