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 2 based on the performance of GGOF High Yield Bond Fund, which is managed by Steve Kearns of Guardian Capital LP.
The second in this series of notes offers 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 March 2, 2007.
“The strong track record of GGOF High Yield Bond Fund makes it an excellent holding for income-oriented investors,” said Gavin Graham, chief investment officer, GGOF. “High yield bonds have low correlations not merely with investment grade bonds but other income generating assets such as income trusts and dividend paying stocks. Therefore, adding high yield bonds to a portfolio not only reduces volatility, but also gives superior potential for price appreciation relative to investment grade bonds. It also allows for the potential to generate positive returns in almost any market environment.”