BMO Structured Outcome ETFs
Introducing a new range of BMO ETFs to help you dial down risk or dial up equity returns.
Stay dialed into the market
In the quest to build better investment portfolios, one name has constantly stood as your partner on the frontier of innovation: BMO Global Asset Management.
In 2009, we established BMO ETFs to answer the call for more asset classes and investment strategies. Our focus on broader access has helped so many Canadians tailor portfolios to their needs—and you’ve rewarded us with greater trust and assets under management.
Now we’re unlocking cutting-edge strategies that deliver a whole new range of outcomes—many of which were only available to a select group of investors. Introducing: BMO Structured Outcomes ETFs.
BMO Buffer ETFs
Worried about an economic decline? Want to reduce the risk of market timing? BMO Buffer ETFs can complement or substitute your core equity positions, providing a built-in cushion on the downside while keeping you invested in broad U.S. equities.1
BMO US Equity Buffer Hedged to CAD ETF – October
(Ticker: ZOCT)
These strategies help you participate in the upside to a pre-determined level—and if the underlying reference asset falls, you have a buffer zone to mitigate losses. In a nutshell: you trade in some upside for added downside protection.
Potential Outcomes Scenarios: Day 1 to Day 365
How Buffer ETFs Work
Buffer ETFs use option contracts engineered to provide a layer of protection with a cap on the market participation over the defined period. Within the period, values will depend on the market, intrinsic and time value of the options.2 The buffered zone and cap on market participation is set at the beginning of the period and only applies at the end of the specified outcome period. Investors trading the ETFs during the period can experience different performance from the stated downside buffers and upside cap.
Why buy?
- No Options Expertise Required: Traditional ETF that trades on the exchange
- No Upfront Commissions: As opposed to other structures, ETFs are ideal for fee-based and discretionary accounts
- No Use of Leverage: Outcomes generated through a mix of equities
BMO Accelerator ETFs
Need more near-term growth? BMO Accelerator ETFs offers a way to ramp up your equity exposure and deliver more from a slow growth environment, providing approximately 2x the price returns (plus dividends) of an underlying reference asset.3
BMO US Equity Accelerator Hedged to CAD ETF
(Ticker: ZUEA)
BMO Canadian Banks Accelerator ETF
(Ticker: ZEBA)
You can effectively double your upside to a pre-Structured level—capitalizing on a mix of equities and options. The kicker: Accelerator ETFs do not amplify your downside risk.
How Accelerator ETFs Work
Accelerator ETFs use options contracts engineered to provide approximately 2x price returns with a cap on the market participation over the defined period. The accelerator zone and upside cap on market participation are set at the beginning of the period and only apply at the end of the specified outcome period. Investors trading the ETFs during the period can experience different performance from the stated outcomes.
Why buy?
- No Options Expertise Required: Traditional ETF that trades on the exchange
- No Upfront Commissions: As opposed to other structures, ETFs are ideal for fee-based and discretionary accounts
- No Use of Leverage: Outcomes generated through mix of equities and option contracts
Additional Resources
1 BMO Buffer ETFs seeks to provide income and appreciation that match the return of a Reference Index up to a cap (before fees, expenses and taxes), while providing a buffer against the first 15% (before fees, expenses and taxes) of a decrease in the Reference Index over a period of approximately one year, starting from the first business day of the stated outcome period.
2 Intrinsic value refers to the difference between the current price of the underlying security and the strike price in the option contract. Time value, by contrast, reflects an additional premium that investors are willing to pay for the time left on the option contract; typically, the time value of an option decreases as the contract approaches expiry.
3 BMO Accelerator ETFs seek to provide unitholders with income and approximately double (2x) the price return of a Reference Index that gives exposure to equity securities up to a cap (before fees, expenses and taxes).
Disclosures
This communication is intended for informational purposes only and is not, and should not be construed as, investment and/or tax advice to any individual. Particular investments and/or trading strategies should be evaluated relative to each individual’s circumstances. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment.
An investor that purchases Units of a Structured Outcome ETF other than at starting NAV on the first day of a Target Outcome Period and/or sells Units of a Structured Outcome ETF prior to the end of a Target Outcome Period may experience results that are very different from the target outcomes sought by the Structured Outcome ETF for that Target Outcome Period. Both the cap and, where applicable, the buffer are fixed levels that are calculated in relation to the market price of the applicable Reference ETF and a Structured Outcome ETF’s NAV (as Structured herein) at the start of each Target Outcome Period. As the market price of the applicable Reference ETF and the Structured Outcome ETF’s NAV will change over the Target Outcome Period, an investor acquiring Units of a Structured Outcome ETF after the start of a Target Outcome Period will likely have a different return potential than an investor who purchased Units of a Structured Outcome ETF at the start of the Target Outcome Period. This is because while the cap and, as applicable, the buffer for the Target Outcome Period are fixed levels that remain constant throughout the Target Outcome Period, an investor purchasing Units of a Structured Outcome ETF at market value during the Target Outcome Period likely purchase Units of a Structured Outcome ETF at a market price that is different from the Structured Outcome ETF’s NAV at the start of the Target Outcome Period (i.e., the NAV that the cap and, as applicable, the buffer reference). In addition, the market price of the applicable Reference ETF is likely to be different from the price of that Reference ETF at the start of the Target Outcome Period. To achieve the intended target outcomes sought by a Structured Outcome ETF for a Target Outcome Period, an investor must hold Units of the Structured Outcome ETF for that entire Target Outcome Period.
S&P 500® is a registered trademark of Standard & Poor’s Financial Services LLC (“S&P”). This trademark has been licensed for use by S&P Dow Jones Indices LLC and sublicensed to BMO Asset Management Inc. in connection with the above-mentioned BMO ETFs. These BMO ETFs are not sponsored, endorsed, sold or promoted by S&P Dow Jones LLC, S&P, or their respective affiliates and S&P Dow Jones Indices LLC, S&P and their affiliates make no representation regarding the advisability of trading or investing in such BMO ETF(s).
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. The indicated rates of return are the historical annual compound total returns including changes in prices and reinvestment of all distributions and do not take into account commission charges or income taxes payable by any unitholder that would have reduced returns. Exchange traded funds are not guaranteed, their value 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 ETFs 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 and administered by BMO Asset Management Inc., an investment fund manager and portfolio manager, and separate legal entity from Bank of Montreal.
BMO Global Asset Management is a brand name under which BMO Asset Management Inc. and BMO Investments Inc. operate.
®/™Registered trademarks/ trademark of Bank of Montreal, used under licence.