BMO ETF Portfolio Strategy Report (Q1 2024)

All prices, returns and portfolio weights are as of market close on December 31, 2023, unless otherwise indicated.
Alfred Lee CFA, CMT, DMS,
Portfolio Manager and Investment Strategist, Exchange Traded Funds
[email protected]
2024 BMO ETF Desk Investment Outlook: Sticking the Landing

Our last new year outlook outlined how tighter monetary policy and supply-side healing would lead to disinflationary pressures. We expect these forces to continue as we head into 2024, and while central banks have significantly reined in inflation, they still need to stick the landing. The latest Consumer Price Index (CPI) readings are at 3.1%1 and 3.1%2 in Canada and the U.S., respectively. Real rates,3 which we measure as the 12-month T-bill, net of year-over-year CPI, are at their highest levels since 2009 on both sides of the border. Some central bankers expect this to be a drag on the economy, which may be why the market is pricing in aggressive rate cuts in 2024.

Comparing Canada and U.S. Real Rates

Source: Bloomberg, BMO Asset Management Inc. (Real rate taken as 12-month T-bill net of year-over-year CPI).

When Could We See Rate Cuts?

Overnight Index Swaps (OIS) are currently pricing in at least five rate cuts by the U.S. Federal Reserve (Fed) in 2024. With the most recent CPI reading still well above its target range, the Federal Open Market Committee (FOMC) will likely need to see the CPI in the low 2.0% range or lower for a sustained period before feeling comfortable in cutting rates. Additionally, with the U.S. Presidential Elections at the end of the year, the runway for rate cuts may not be as long as the market expects.

In Canada, inflation (when stripping the impact of shelter) is getting closer to the Bank of Canada’s (BoC) target rate. Moreover, household debt remains at record highs, which is why we anticipate rate cuts to be more likely and much sooner than those of its U.S. counterpart. It will be interesting to see whether lower rates will fuel housing prices, making homeownership a further stretch, as Canadians have not seen a meaningful correction in property prices. The path of rate cuts will depend on the economic scenario we find ourselves in and the geopolitical landscape. Below, we also include BMO Global Asset Management (BMO GAM)’s ​House View” supplied by the Multi-Asset Solutions Team (MAST).

Current Implied Interest Rate4Changes (Fed and BoC)
Interest Rate Probability
U.S. (Fed) Canada (BoC)
Meeting #Hikes/​Cuts Implied Rate Change Implied Overnight Rate Meeting #Hikes/​Cuts Implied Rate Change Implied Rate
01/31/2024 0.093 0.023 5.307 01/24/2024 0.105 0.026 4.996
03/20/2024 0.756 0.189 5.141 03/06/2024 0.604 0.151 4.871
05/01/2024 1.639 0.41 4.92 04/10/2024 1.257 0.314 4.708
06/12/2024 2.569 0.642 4.687 06/05/2024 2.218 0.555 4.468
07/31/2024 3.38 0.845 4.485 07/24/2024 2.919 0.73 4.292
09/18/2024 4.28 1.07 4.26 09/04/2024 3.576 0.894 4.128
11/07/2024 5.037 1.259 4.07 10/23/2024 4.563 1.141 3.881

Source: Bloomberg (calculated using the World Interest Rate Probabilities (WIRP) <Go> function on December 182023).

BMO GAM House View – 2024 Macro-Economic Scenarios:
A More Convincing Case for Soft Landing

Here are the four possible scenarios in the order in which we believe are most likely to least likely.

There can be no assurance that actual results will not differ materially from expectations. Source: BMO Global Asset Management (“House view” provided by BMO GAM MAST)

Time to Dial Back Expectations 

Currently, the S&P 500 Composite is pricing in an earnings growth rate of 11.8%.5 Combined with the ​soft-landing” scenario becoming the market consensus, this seems inconsistent with the aggressive rate cuts on the table. Not long ago, the Fed outlined how higher long-term rates would reduce the need for further rate hikes, only for the long end of the curve to fall significantly in the last quarter. We remain constructive on risk assets in 2024; however, with the significant rally we saw from the reaction to the Fed’s ​dot-plot” announcement in December, investors need to dial back expectations.

With rate cuts likely more moderate than the market’s current expectations (in a soft-landing scenario), we anticipate this will encourage investors to venture further out on the risk curve. Lower risk-free rates6 mean equity risk premiums will expand, which will see some asset flows migrate from cash or ​cash-like” products, which experienced sizable inflows the previous year. As we highlighted in last year’s outlook report, we are now in an era that will not move back to zero interest rate policies (ZIRP) and quantitative easing, and as a result, rates will be higher this decade than last. This also means portfolio construction needs to be adjusted accordingly from both an asset allocation and selection perspective.

Continued disinflationary pressures should pave the way for central banks to ease monetary conditions. Should central banks stick the landing by taming inflation while keeping economic conditions relatively strong, risk assets should be well-positioned in 2024. The main risks remain geopolitical, with conflicts arising around the globe and a growing political divide in the U.S.

 

Things to Keep an Eye On

During the era of low interest rates, traditional balanced portfolios were challenged, as the allocation to fixed income provided few benefits. Lower rates meant less income coming from bonds. It also provided investors with inexpensive funding to leverage. Episodes of market volatility would then lead to margin calls, intensifying the correlations between asset classes. With interest rates returning to more normalized levels over the last 18 months, we have seen a revival of the prototypical 60/40 portfolio.

Recommendation: One positive of the low-interest rates era was using alternative assets to complement traditional portfolios. While traditional balanced portfolios have become more effective with higher rates, alternatives can still improve a portfolio’s overall efficiency. Complementing a portfolio with long-short equity strategies, such as the BMO Long Short Canadian Equity ETF (Ticker: ZLSC) or the BMO Long Short US Equity ETF (Ticker: ZLSU),can help to improve a portfolio’s overall risk/​return profile. Gold bullion, which we had on last year’s watch list, can also be a diversifier.

Increasing Need for Alternatives

Source: Bloomberg, BMO Asset Management Inc. (Daily correlation between S&P/TSX Composite and FTSE/TMX Canada Bond Universe).

U.S. regional bank stocks experienced some substantial hardships last year. The significant tightening of monetary conditions led to a deterioration of duration-sensitive held-to-maturity (HTM) portfolios. The default of several regional banks led to the creation of the Bank Term Funding Program (BTFP), which allowed troubled banks to exchange high-quality bonds for par value. This program, one of the key tools in calming markets after the collapse of Silicon Valley Bank (SVB), is set to expire in March.

Recommendation: The U.S. banks — particularly the regionals — will be an area to watch, as the industry will be highly leveraged to interest rates. Multiple rate cuts would likely benefit the regional banks, as it would remove significant pressure from their HTM portfolios. However, if interest rates remain resilient (or even rise, if inflation were to return), the termination of the BTFP may expose them to risk as it eliminates the backstop. Last year, we switched from our BMO Equal Weight US Banks Index ETF (Ticker: ZBK) to the BMO Covered Call Technology ETF (Ticker: ZWT). We believe the technology sector provides investors with upside if rates move lower, without the same degree of risks if rates remain elevated or even reverse course.

U.S Banks Are Leveraged to Interest Rates

Source: FRED Economic Data, Bank Term Funding Program Reserve – Wednesday Close (in $ millions).

High-yield bonds have been a forgotten asset class in recent years. Elevated interest rates have made the yields on investment grade bonds more attractive without extending reach into junk bonds. Moreover, lower credit quality issuers face more uncertainty when refinancing is more costly. While we still believe the sweet spot in fixed income to be investment grade bonds, high-yield issuers would benefit significantly from lower yields, provided economic conditions remain robust.

Recommendation: Credit spreads tightened significantly in the last quarter of 2023, as measured by the CDX High Yield Spread Index, with a drop in yields on the long end of the curve. The revealing of the Fed’s dot plots in December also provided further credit spread tightening. This illustrates how spreads in the last year were a second derivative of interest rates, which led to concerns over refinancing rather than a weak economic backdrop. The BMO High Yield US Corporate Bond Index ETF (Ticker: ZJK) will be an interesting exposure to watch in 2024 and see whether flows will return to the asset class.

High Yield Bonds Spreads Have Tightened

Source: Bloomberg, BMO Global Asset Management Inc.

Changes to portfolio strategy
Sell/​Trim Ticker (%) Buy/​Add Ticker (%)
BMO Equal Weight US Health Care
Hedged to CAD Index ETF
ZUH 4.0% BMO MSCI USA High Quality Index ETF ZUQ 2.0%
BMO Canadian Bank Income Index ETF ZBI 3.0% BMO Covered Call Technology ETF ZWT 2.0%
BMO Long Short US Equity ETF ZLSU 3.0%

*The portfolio holdings are subject to change without notice and only represent a small percentage of portfolio holdings. They are not recommendations to buy or sell any particular security.

Asset Allocation:
  • We remain positive on risk assets for the new year, though we believe the market’s expectations (depending on the economic scenario) for rate cuts could be optimistic. The year could likely begin with strong returns as markets anticipate a dovish Fed. As the year progresses, we may see some rate cuts priced out of the market if economic conditions remain resilient and a soft landing is achieved. Without an economic fallout, it is hard to see how we get to six rate cuts unless disinflation quickly turns into deflation. We favour equities over fixed income and believe there will be a dash from cash in the coming year, as even a rate cut or two would force investors out the risk curve. Given we are already overweight in equities, we will not adjust our asset allocation; however, with intra-market correlation moving lower, there will be opportunities in the coming months to move to more targeted exposure, such as sector ETFs.
Equities:
  • The last two years showed how market leadership in factors can quickly change. Low Volatility was the factor that outperformed in 2022, with Quality being the laggard. Last year, we saw the opposite occur, with Quality making a significant comeback. While both factors tend to be more defensive growth in nature, they pair well, being complementary from a sector exposure perspective and in combination as a barbell strategy. The two factors combined have been shown to provide insulation in various rate environments. Our core consists of exposures such as the BMO MSCI USA High Quality Index ETF (Ticker: ZUQ) and the BMO Low Volatility US Equity ETF (Ticker: ZLU). Higher beta factors such as value may outperform in the first quarter, so we won’t be surprised to see the BMO MSCI USA Value Index ETF (Ticker: ZVU) be the first to get out of the gates. Over the long haul, however, we still favour defensive growth factors that provide exposure to mature companies and durable balance sheets.
  • This quarter, we look to eliminate our position in the BMO Equal Weight US Health Care Hedged to CAD Index ETF (Ticker: ZUH). This ETF has been a long-standing position within our strategy; however, we are looking to focus our bets on more interest-rate-sensitive sectors, such as Technology. We will redistribute the 4.0% allocation in ZUH evenly across the ZWT and ZUQ.
  • We still view Canadian banks to be extremely attractive. We have allocated 8.0% to the BMO Equal Weight Banks Index ETF (Ticker: ZEB), the maximum for a sector ETF. As we believe the BoC to be more likely than the Fed to cut rates multiple times this year, that should be a catalyst for the banks as it would potentially reduce the amount of non-performing loans.
Fixed Income:
Non-Traditional/Hybrids:
  • We are eliminating our position in the BMO Canadian Bank Income Index ETF (Ticker: ZBI) in favour of ZLSU. We believe this change will provide greater diversification, as the preferred shares and bonds held in ZBI can be attained from other positions in the strategy. Similar to hedge funds, ZLSU can provide diversification to traditional assets without the exorbitant management and performance fees. Furthermore, it can provide some protection as its exposure to short securities can potentially benefit when markets sell off.

For other interesting reads, please check out publications from our colleagues from the MAST team.

Stats and portfolio holdings

Investment Objective and Strategy:

The strategy involves tactically allocating to multiple asset-classes and geographies to achieve long-term capital appreciation and total return by investing primarily in ETFs

 

Ticker ETF Name Sector Positioning Price Management Fee* Weight (%) 90-Day Vol Volatility Contribution Annualized Distribution Yield (%)** Yield/Vol**
Fixed Income
ZDB BMO Discount Bond Index ETF Fixed Income Core $14.92 0.09% 9.0% 7.9 6.4% 2.5% 0.31
ZSU BMO Short-Term US IG Corporate Bond Hedged to CAD Index ETF Fixed Income Tactical $13.24 0.25% 7.0% 5.0 3.2% 3.2% 0.64
ZTIP.F BMO Short-Term US TIPS Index ETF (Hedged Units) Fixed Income Tactical $28.70 0.15% 5.0% 2.8 1.3% 3.9% 1.42
ZTL BMO Long-Term US Treasury Bond Index ETF Fixed Income Tactical $40.20 0.20% 5.0% 7.8 3.5% 3.6% 0.46
ZMMK BMO Money Market Fund ETF Series Fixed Income Tactical $50.03 0.12% 3.0% 1.3 0.4% 4.9% 3.69
Total Fixed Income 29.0% 14.7%
Equities
ZLB BMO Low Volatility Canadian Equity ETF Equity Core $41.26 0.35% 17.0% 12.6 19.4% 2.7% 0.21
ZRE BMO Equal Weight REITs Index ETF Equity Tactical $20.65 0.05% 4.0% 23.1 8.3% 5.4% 0.23
ZLU BMO Low Volatility US Equity ETF Equity Core $46.25 0.30% 8.0% 9.9 7.1% 2.3% 0.23
ZLD BMO Low Volatility International Equity Hedged to CAD ETF Equity Core $25.49 0.40% 7.0% 9.7 6.1% 2.7% 0.28
ZEO BMO Equal Weight Oil & Gas Index ETF Equity Tactical $61.78 0.55% 4.0% 17.9 6.5% 4.8% 0.27
ZEB BMO Equal Weight Banks Index ETF Equity Tactical $34.12 0.55% 8.0% 16.9 12.2% 5.1% 0.30
ZUQ BMO MSCI USA High Quality Index ETF Equity Core $66.59 0.30% 12.0% 12.3 13.3% 0.9% 0.07
ZWT BMO Covered Call Technology ETF Equity Tactical $36.41 0.65% 5.0% 17.3 7.8% 4.0% 0.23
Total Equity 65.0% 80.6%
Non-Traditional Hybrids
ZPR BMO Laddered Preferred Share Index ETF Hybrid Tactical $9.08 0.45% 3.0% 11.3 3.0% 6.0% 0.53
ZLSU BMO Long Short US Equity ETF Hybrid Tactical $31.75 0.45% 3.0% 6.1 1.6% 0.33
Total Alternatives 6.0% 4.7%
Total Cash 0.0% 0.0 0.0% 0.0%
Portfolio 0.33% 100.0% 11.1% 100.0% 3.2% 0.29

Source: Bloomberg, BMO Asset Management Inc., as of December 18, 2023. **Annualized Distribution Yield: The most recent regular distribution, or expected distribution, (excluding additional year end distributions) annualized for frequency, divided by current NAV. *** Yield calculations for bonds are based on yield to maturity, including coupon payments and any capital gain or loss that the investor will realize by holding the bonds to maturity and. For equities, it is based on the most recent annualized income received divided by the market value of the investments. Please note yields of equities will change from month to month based on market conditions. The portfolio holdings are subject to change without notice and only represent a small percentage of portfolio holdings. They are not recommendations to buy or sell any particular security.

Fund Performance (%) 1 Mo 3 Mo 1 Yr 2 Yr 3 Yr 5 Yr SI Inception Date
ZDB 4.33 2.02 1.33 7.80 11.22 4.58 18.58 February 102014
ZSU 2.29 1.52 3.58 2.91 3.44 6.75 12.77 February 102014
ZTIP.F 1.00 1.06 2.54 0.08 4.31 January 202021
ZTL 7.67 3.86 7.13 32.53 36.25 10.87 12.52 February 282017
ZMMK 0.40 1.28 4.93 6.97 6.98 November 292021
ZLB 3.47 8.05 8.93 8.53 33.36 65.12 279.97 October 212011
ZRE 7.28 6.00 9.89 19.28 0.09 13.05 154.76 May 192010
ZLU 0.54 3.90 3.37 4.34 25.89 54.78 276.59 March 192013
ZLD 2.37 5.01 12.39 3.76 16.88 29.09 61.49 February 102016
ZEO 0.51 1.74 1.72 56.35 155.56 93.67 14.55 October 202009
ZEB 8.43 0.02 6.23 5.59 28.19 39.94 258.69 October 202009
ZUQ 6.09 1.99 23.63 9.83 36.24 100.00 258.94 November 52014
ZWT 2.34 13.85 64.87 14.00 41.45 January 202021
ZPR 10.15 9.11 4.48 11.17 12.13 14.37 5.14 November 142012
ZLSU October 22023

BMO Global Asset Management, as of November 302023.

Portfolio Holdings

Ticker Name Weight
ZLB BMO LOW VOLATILITY CANADIAN EQUITY ETF 17.0%
ZUQ BMO MSCI USA HIGH QUALITY INDEX ETF 12.0%
ZDB BMO DISCOUNT BOND INDEX ETF 9.0%
ZLU BMO LOW VOLATILITY US EQUITY ETF 8.0%
ZEB BMO EQUAL WEIGHT BANKS INDEX ETF 8.0%
ZSU BMO SHORT-TERM US IG CORPORATE BOND HEDGED TO CAD INDEX ETF 7.0%
ZLD BMO LOW VOLATILITY INTERNATIONAL EQUITY HEDGED TO CAD ETF 7.0%
ZTIP.F BMO SHORT-TERM US TIPS INDEX ETF (HEDGED UNITS) 5.0%
ZTL BMO LONG-TERM US TREASURY BOND INDEX ETF 5.0%
ZWT BMO COVERED CALL TECHNOLOGY ETF 5.0%
ZRE BMO EQUAL WEIGHT REITS INDEX ETF 4.0%
ZEO BMO EQUAL WEIGHT OIL & GAS INDEX ETF 4.0%
ZMMK BMO MONEY MARKET FUND ETF SERIES 3.0%
ZPR BMO LADDERED PREFERRED SHARE INDEX ETF 3.0%
ZLSU BMO LONG SHORT US EQUITY ETF 3.0%
TOTAL 100.0%

The portfolio holdings are subject to change without notice and only represent a small percentage of portfolio holdings. They are not recommendations to buy or sell any particular security.

 

Source: Bloomberg, BMO Asset Management Inc., as of December 182023.

Portfolio characteristics

Fixed Income Sector Breakdown
Federal 56.9% Weighted Average Term 12.01
Provincial 10.5% Weighted Average Duration 6.19
Investment Grade Corporate 32.0% Weighted Average Coupon 2.21%
Non-Investment Grade Corporate 0.0% Weighted Average Current Yield 2.72%
Weighted Average Yield to Maturity 3.78%

Weighted Average Term: The average interest received by a bond investor, expressed on a nominal annual basis.

Weighted Average Current Yield: The market value-weighted average coupon divided by the weighted average market price of bonds.

Weighted Average Yield to Maturity: The market value-weighted average yield to maturity includes coupon payments and any capital gain or loss that the investor will realize by holding the bonds to maturity.

Weighted Average Duration: The market value-weighted average duration of underlying bonds divided by the weighted average market price of the underlying bonds. Duration is a measure of the sensitivity of the price of a fixed income investment to a change in interest rates.

Weighted Average Coupon: The average time it takes for bonds to mature in a fixed income portfolio.

The portfolio holdings are subject to change without notice and only represent a small percentage of portfolio holdings. They are not recommendations to buy or sell any particular security.

Source: Bloomberg, BMO Global Asset Management, as of December 182023.

Other Interesting Reads and Upcoming Webinars:
  • 10 Big Investment Trends for 2023
  • 2024 Outlook: On Wednesday, January 24, we’ll be releasing a special report and video featuring our outlook for 2024. It will include a recap of where markets are heading, risks and opportunities, as well as our team’s bullish or bearish ratings on bonds, dividends, and four specific sectors: Financials, Real Estate, Health Care, and Technology. Stay tuned to this space for more details on how you can access it.

1 Consumer Price Index. Statistics Canada, December 192023.

2 Consumer Price Index. U.S. Bureau of Labor Statistics, December 122023.

3 The real rate is the observed market interest rate adjusted for the actual or anticipated rate of inflation.

4 The implied interest rate is the difference between the central banks’ overnight rate and what the swaps markets are pricing in.

5 FactSet, December 112023.

6 The risk-free rate is the theoretical return an investor can get without assuming any risk.

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Volatility: Measures how much the price of a security, derivative, or index fluctuates. The most commonly used measure of volatility when it comes to investment funds is standard deviation.

Yield curve: A line that plots the interest rates of bonds having equal credit quality but differing maturity dates. A normal or steep yield curve indicates that long-term interest rates are higher than short-term interest rates. A flat yield curve indicates that short-term rates are in line with long-term rates, whereas an inverted yield curve indicates that short-term rates are higher than long-term rates.

Any statement that necessarily depends on future events may be a forward-looking statement. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Although such statements are based on assumptions that are believed to be reasonable, there can be no assurance that actual results will not differ materially from expectations. Investors are cautioned not to rely unduly on any forward-looking statements. In connection with any forward-looking statements, investors should carefully consider the areas of risk described in the most recent simplified prospectus.

The viewpoints expressed by the individuals represents their assessment of the markets at the time of publication. Those views are subject to change without notice at any time. The information provided herein does not constitute a solicitation of an offer to buy, or an offer to sell securities nor should the information be relied upon as investment advice. Past performance is no guarantee of future results. This communication is intended for informational purposes only.

This communication is for information purposes. The information contained herein is not, and should not be construed as, investment, tax or legal advice to any party. Particular investments and/​or trading strategies should be evaluated relative to the individual’s investment objectives and professional advice should be obtained with respect to any circumstance.

Index returns do not reflect transactions costs or the deduction of other fees and expenses and it is not possible to invest directly in an Index. Past performance is not indicative of future results.

The Index is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”), and has been licensed for use by the Manager. S&P®, S&P 500®, US 500, The 500, iBoxx®, iTraxx® and CDX® are trademarks of S&P Global, Inc. or its affiliates (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”), and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by the Manager. The ETF is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the Index.

The ETFs referred to herein is not sponsored, endorsed, or promoted by MSCI and MSCI bears no liability with respect to the ETF or any index on which such ETF is based. The ETF’s prospectus contains a more detailed description of the limited relationship MSCI has with the Manager and any related ETF.

Commissions, management fees and expenses all may be associated with investments in exchange traded funds. Please read the ETF Facts or prospectus of the BMO ETFs before investing. Exchange traded funds are not guaranteed, their values change frequently and past performance may not be repeated.

For a summary of the risks of an investment in the BMO ETFs, please see the specific risks set out in the BMO ETF’s prospectus. 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.

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For greater certainty, no part of this presentation may be provided to investors and/or potential investors without the written permission of BMO GAM. The information contained herein is not, and should not be construed as, investment advice and or tax advice to any individual. Investments should be evaluated relative to the individual’s investment objectives and professional advice should be obtained with respect to any circumstance. This communication is intended for information purposes only. Any statement that necessarily depends on future events may be a forward-looking statement. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Although such statements are based on assumptions that are believed to be reasonable, there can be no assurance that actual results will not differ materially from expectations. Investors are cautioned not to rely unduly on any forward-looking statements. In connection with any forward-looking statements, investors should carefully consider the areas of risk described in the most recent simplified prospectus. BMO GAM undertakes no obligation to update publicly or otherwise revise any forward-looking statement or information whether as a result of new information, future events or other such factors which affect this information, except as required by law.

The viewpoints expressed by the Portfolio Manager represents their assessment of the markets at the time of publication. Those views are subject to change without notice at any time without any kind of notice. The information provided herein does not constitute a solicitation of an offer to buy, or an offer to sell securities nor should the information be relied upon as investment advice. Past performance is no guarantee of future results. This communication is intended for informational purposes only.

The portfolio holdings are subject to change without notice and only represent a small percentage of portfolio holdings. They are not recommendations to buy or sell any particular security.

Commissions, management fees and expenses (if applicable) all may be associated with investments in BMO ETFs and ETF Series of the BMO Mutual Funds. Please read the ETF facts or prospectus of the relevant BMO ETF or ETF Series before investing. BMO ETFs and ETF Series are not guaranteed, their values change frequently and past performance may not be repeated.

For a summary of the risks of an investment in the BMO ETFs or ETF Series of the BMO Mutual Funds, please see the specific risks set out in the prospectus. BMO ETFs and ETF Series 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.

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