Guardian Group of Funds Ltd. (GGOF) today announced the launch of Bank of Montreal GGOF C.O.R.E. Protected Deposit Notes High Yield Bond R.O.C. Class, Series 1 based on the performance of GGOF High Yield Bond Fund, which is managed by Steve Kearns of Guardian Capital LP.

The notes offer investors the opportunity to participate in the returns of the fund while 100% of their principal is protected if held to maturity by Bank of Montreal as issuer. The notes make potential monthly distributions in the form of Return of Capital (R.O.C.), a more tax-efficient form of distribution than interest income. Seventy-five per cent of the distribution rate of GGOF High Yield Bond Fund will take this form, with the remaining 25% of the distributions notionally invested in the fund for growth. The notes will be available until December 15.

“GGOF High Yield Bond Fund’s strong long-term track record makes it an excellent holding for income-oriented investors,” said Gavin Graham, chief investment officer, GGOF, in a news release. “High yield bonds are unique in the investment universe because they combine some of the best features of both income and equity products. Their low correlation to interest rates provides valuable portfolio diversification and their superior potential for price appreciation, relative to investment grade bonds, allows for the potential to generate positive returns in almost any market environment.”

The fund portfolio will be comprised of units of GGOF High Yield Bond Fund.

BMO Trust Company, a wholly owned subsidiary of Bank of Montreal, will own 100% of the issued shares of the investment manager.