No APA (not double spaced)
If you’re good with Finance then message me for this assignment.
See the attached pdf and answer ONLY question number 7.
Discuss the assignment as a financial planner;
1. Discuss with your client (Professor) your selected fund features;
2. Discuss the risks/expected returns
3. Your view why this fund is suitable for your client family;
4. Discuss the diversification
5. Discuss the tax issues
6. Discuss the investment strategy for such a fund product
7. Anything else includes the market outlook and etc.
Reasons to Invest in the Fund • For investors looking for peace of mind with low volatility and stable income in
all market environments • Over 20 year track record with only 3 negative calendar year returns (1994,
1999, 2013) • Comfort of fixed income investments with easy access to your money
Growth of $10,000 as of 31/05/2021
Apr88 Apr92 Apr96 Apr00 Apr04 Apr08 Apr12 Apr16 Apr20
Graph shows comparative performance rate of price in increments of $10,000
Top Holdings as of 30/04/2021 Holdings %
Ontario, Province of 2.9% 02-JUN-2049 4.8 Quebec, Province of 3.5% 01-DEC-2045 3.7 Quebec, Province of 2.75% 01-SEP-2027 3.6 Ontario, Province of 2.4% 02-JUN-2026 3.5 Canada (Government) 1.25% 01-JUN-2030 3.1 Canada (Government) 2.5% 01-JUN-2024 3.1 British Columbia, Province of 5.62% 17-AUG-2028 2.9 Ontario, Province of 2.05% 02-JUN-2030 2.6 Canada (Government) 2.25% 01-JUN-2025 2.6 Canada (Government) .5% 01-DEC-2030 2.4 Top Holdings (% of Portfolio) 32.3 Total Portfolio Holdings 212
Annual Compound Returns as of 31/05/2021 1 mo 3 mo 6 mo YTD 1 yr 2 yr 3 yr 5 yr 10 yr SI 0.5% -1.2% -4.7% -5.0% -2.9% 1.3% 2.6% 1.5% 2.2% 5.3%
Calendar Year Returns as of 31/05/2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 7.6% 5.1% 0.1% 1.3% 0.5% 0.9% 7.1% -2.9% 2.5% 6.8%
Fixed Income Characteristics as of 30/04/2021 Bond Term (%)
Duration (yrs) b Portfolio Yield a 1-5 yrs 5-10 yrs >10 yrs
30.9 38.8 27.2 7.68 2.81%
Distributions ($/unit) 2021 May
.0073 .0050 .0050 .0092 .0274 .0050 .0241 .0050 .0135 .0138 .0304 .0050 Distribution Rate (annualized) c 0.64% as of 31/05/2021
Standard Deviation** as of 31/05/2021 3 yr 4.8% 5 yr 4.4% 10 yr 3.9%
Fund Details Portfolio Advisor: BMO Asset Management Inc. Portfolio Manager: Andrew Osterback, Piper Kerr Fund Inception Date: May 2, 1988 Prospectus Risk Rating: Low Fund Benchmark: FTSE TMX Canada Universe
Bond Index Minimum Investment: $500 Subsequent Investment: $50 Price/Unit (NAV): $13.69 as of 31/05/2021 AUM (total fund in millions): $348.74 as of 31/05/2021 Management Fee: 1.30% MER: 1.60% as of 30/09/2020 Distribution Frequency: Monthly Category: Canadian Fixed Income
Asset Allocation as of 30/04/2021 ■ Fixed Income 99.9% ■ Cash 0.1%
Geographical Allocation as of 30/04/2021 ■ Canada 91.2% ■ United States 7.1% ■ Australia 0.9% ■ United Kingdom 0.8%
Bond Type Allocation* as of 30/04/2021 ■ Corporate Notes/Bonds 71.4% ■ Govt. Agency Notes/Bonds 17.5% ■ Fixed Income Other 10.9% ■ ABS 0.2%
Credit Quality of Portfolio as of 30/04/2021 AAA 21.7% BBB 28.0% AA 27.6% BB 0.1% A 22.6%
* Percentages are based on the fixed income portion of the portfolio.
FundSERV Codes Front End† Low Load* Deferred
A (No Load) BMO143
* DSC closed to new purchase. As of November 2020, LL no longer available for sale. †Front End = Sales Charge
BMO Bond Fund – Series A
** An annualized statistical measure of risk of a fund’s performance around its average. It is calculated based on a fund’s monthly returns over a specified time period. The greater the standard deviation, the greater the fund’s volatility. a It is the most recent income received by the fund in the form of dividends, interest and other income annualized based on the payment frequency, divided by the current market value of the fund’s investments. It is gross of any fees or expenses of the fund. b A measure of sensitivity of bond prices to changes in interest rates. Generally, the higher the duration the more volatile the bond’s price will be when interest rates change. c For the month indicated in the as of date, the distribution paid is multiplied by 12, divided by the month end net asset value of the fund and annualized. This excludes any additional annual distributions that may have been paid in the month.
This material may contain forward-looking statements. “Forward-looking statements,” can be identified by the use of forward-looking terminology such as “may”, “should”, “expect”, “anticipate”, “outlook”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof, or variations thereon, or other comparable terminology. Investors are cautioned not to place undue reliance on such statements, as actual results could differ materially due to various risks and uncertainties. Commissions, trailing commissions (if applicable), management fees and expenses all may be associated with mutual fund investments. Please read the fund facts or prospectus of the relevant mutual fund before investing. The indicated rates of return are the historical annual compounded total returns for the period indicated including changes in unit value and reinvestment of all distributions and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Distributions are not guaranteed and are subject to change and/or elimination. For a summary of the risks of an investment in BMO Mutual Funds, please see the specific risks set out in the prospectus. BMO Mutual Funds are managed by BMO Investments Inc., which is an investment fund manager and a separate legal entity from Bank of Montreal. ®/™Registered trade-marks/trade-mark of Bank of Montreal, used under licence.Lipper, a Refinitiv Company. © 2020 Refinitiv. All rights reserved. Any copying, republication or redistribution of Lipper content is expressly prohibited without the prior written consent of Lipper.
How Your Money Is Invested
The Fund aims to provide monthly income that is inline with current market rates via a core Canadian fixed income portfolio. The portfolio manager will achieve this by: • Investing primarily in high quality fixed income securities issued by Canadian governments and corporations • Examining the economy and determining where interest rates are going to build the Fund’s maturity and sector allocations • Analysing individual securities for credit quality to determine portfolio suitability • Providing monthly investment income that the fund is able to earn
Ideal Investor • You are looking for a core Canadian fixed income fund for your portfolio • You want the potential for higher income from longer term bonds, which form part of the Fund’s portfolio • You are comfortable with low investment risk (i.e. you are willing to accept some fluctuations in the market value of your investment over the short-
Commentary as of 31/03/2021 • The Bank of Canada kept its policy interest rate unchanged and maintained its quantitative easing program that included large-scale asset purchases over the first quarter of 2021 (“the quarter”). It does not anticipate a change in its policy rate until 2023. Market expectations of higher inflation when lockdown measures are lifted, pushed longer-term interest rates higher. As a result, the Canadian yield curve steepened.
• The Fund’s performance over the quarter was negative, in line with the FTSE Canada Universe Bond Index (“the benchmark”). As the portfolio manager remained relatively bullish during the quarter, an overweight in the corporate credit sector was maintained. Like stocks, corporate credit performed well where mid-term corporate bond spreads narrowed. The Fund’s overweight position to the corporate bond sector coupled with corporate spread narrowing, added to the Fund’s relative performance over the period.
• During the quarter, the portfolio manager extended the Fund’s yield curve steepening bias (where longer-term maturities underperform shorter-term maturities). The manager believes market conditions favour upward pressure on interest rates, particularly those rates with longer-dated maturities. Buys and sells were executed consistent with increasing the Fund’s yield curve steepening exposure.
• The portfolio manager will maintain duration/interest rate sensitivity less than that of the benchmark and will underweight the long-end (Maturities> 10 years) of the yield curve where the rise in yields will be most heavily felt. The manager expects that risk assets will continue to be rewarded and as a result, they anticipate that credit spreads will continue to narrow and will outperform Government of Canada benchmarks. They will continue to favour credit by maintaining an overweight to corporate bonds, particularly those with term-to-maturities of less than five years where additional yield and roll down are the most favourable.
• The Fund maintained exposure to U.S. dollar-based corporate bonds during the quarter. All currency exposure was hedged back to Canadian dollar.
BMO Bond Fund – Series A
- Fund Name
- Reasons To Invest
- Growth of 10000
- Top Holdings
- Fund Details
- Asset Allocation
- Geographical Allocation
- Industry or Bond Type Allocation
- Fund Name
- How Your Money Is Invested
- Ideal Investor