Enhanced Income Mutual Funds | BMO Global Asset Management

Q: What are autocallable notes?

Autocallable notes are enhanced-yield strategies that provide investors the potential to receive an above market coupon along with downside contingent protection.

Why invest in enhanced income funds

Our enhanced income mutual funds are a suite of innovative income-generating solutions. Most of them leverage BMO ETFs that have an option strategy overlay, while the BMO Strategic Equity Yield Fund replicates exposure to structured notes (i.e., autocallable notes) which aims to provide higher levels of cash flow and offer downside protection.

Our covered call strategies generate cash flow from option premiums received through covered call writing in addition to dividend income. They also reduce risk compared to unwritten portfolios, making them a valuable portfolio construction tool.

BMO Strategic Equity Yield Fund

This innovative fund aims to replicate exposure to structured notes, putting a whole new asset class within your reach. It focuses on income generation and brings the power of structured notes into a managed solution available to all investors.

BMO enhanced income mutual funds

BMO Covered Call Canada High Dividend ETF Fund

The fund invests up to 100% in BMO Canadian High Dividend Covered Call ETF for exposure to dividend paying Canadian companies and written covered call options to generate income.

BMO Covered Call Canadian Banks ETF Fund

The fund invests up to 100% in BMO Covered Call Canadian Banks ETF for exposure to Canadian banks to generate income and mitigate downside risk through covered call options.

BMO Covered Call Europe High Dividend ETF Fund

The fund invests up to 100% in BMO Europe High Dividend Covered Call ETF for exposure to dividend paying European companies and written covered call options to generate income.

BMO Covered Call U.S. High Dividend ETF Fund

The fund invests up to 100% in BMO US High Dividend Covered Call ETF for exposure to dividend paying U.S. companies to generate income and mitigate downside risk through covered call options.

BMO Covered Call Utilities ETF Fund

The fund invests up to 100% in BMO Covered Call Utilities ETF for exposure to utility companies to generate income and mitigate downside risk through covered call options.

BMO Covered Call Energy ETF Fund

The fund invests up to 100% in BMO Covered Call Energy ETF for exposure to energy and energy-related companies to generate income and mitigate downside risk through covered call options.

BMO Global Enhanced Income Fund

An actively managed diversified portfolio of high-yielding global equity ETFs, aimed at providing income and long-term capital growth.

BMO Premium Yield ETF Fund

The fund invests up to 100% in BMO Premium Yield ETF, which aims to provide exposure to a portfolio of U.S. large cap companies through investing in U.S. equities and derivative instruments.

BMO Strategic Equity Yield Fund

An innovative fund that aims to replicate the payoff of some structured notes. It focuses on income generation, while offering protection against moderate market declines.

Start investing with us

Financial advisors, please contact your regional wholesalers, or call us on 1-800-668-7327

If you are an investor, please speak to your financial advisor about including one or more of our fixed income mutual funds in your portfolio.

Enhanced Income Funds FAQs

How do covered calls work?

A call option is a contract which allows the owner the right to purchase the underlying stock at a predetermined price (the strike price) over a specific time period. Covered Calls work by holding a security and selling (“writing”) a call option on that security. By selling the option, the portfolio receives the call premium which provides additional cashflow compared to only owning the security. The return on the security is capped by the strike price of the call option.

Covered call strategies participate in market appreciation up to the strike price of the options considering the percentage of the overwritten portfolio. Covered call strategies buffer some downside market depreciation based on the additional cashflow. In volatile times, performance will vary based on intra-period market movement.

What are autocallable notes?

Disclaimers

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. 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.

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