Skip to main content

Financial advisers not licensed to sell stocks can now get more access to exchange-traded funds (ETFs).

The mutual fund arm of Bank of Montreal rolled out six BMO Guardian mutual funds on Monday that will invest in a portfolio of various BMO ETFs launched over the past year.

The offerings, which include two tactically managed funds and four other portfolios catering to different risk appetites, charge fees ranging from 1.58 per cent to 1.73 per cent that include a trailer fee for advisers. The F-series of funds sold through fee-based financial planners charge from 0.74 per cent to 0.89 per cent.

For ETF providers, the problem with reaching out to financial advisers is that many of them, who are licensed by the Mutual Fund Dealers Association (MFDA), don't have a dual license to sell stocks too.

"We know there is an appetite for these type of funds," says Serge Pepin, director of investments at BMO Investments Inc. "We have had a steady demand for them from advisers especially with the MFDA."

Invesco Trimark Ltd., which is also affiliated with a U.S. ETF provider Invesco PowerShares Capital Management, have had target-date mutual funds that invest in both PowerShares ETFs and inhouse mutual funds since 2008. Last fall, it also rolled out mutual funds invested in single specialty PowerShares ETFs. See previous Fund Watch blog.

The only problem with the BMO Guardian and Invesco Trimark portfolios is that they stick with their own family of ETFs. It's not surprising given that both firms want the revenue from the ETF fees. BMO ETFs currently have under $600-million in assets in 22 offerings.

It won't be long, however, before someone steps up to the plate to offer a mutual fund that invests in ETFs from different providers. That will be a stronger pitch to investors and their advisers.

The new BMO offerings include:

  • BMO Guardian Tactical ETF Mutual Fund Portfolios
  • BMO Guardian Canadian Tactical ETF Class Advisor Series
  • BMO Guardian Global Tactical ETF Class Advisor Series
  • BMO Guardian Strategic ETF Mutual Fund Portfolios
  • BMO Guardian Security ETF Portfolio Advisor Series
  • BMO Guardian Balanced ETF Portfolio Advisor Series
  • BMO Guardian Growth ETF Portfolio Advisor Series
  • BMO Guardian Aggressive Growth ETF Portfolio Advisor Series