New BMO ETFs

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Re: New BMO ETFs

Postby jiHymas » 16 Sep 2010 00:37

Shakespeare wrote:
Something causes considerable fluctuation in RRB fund values,
I believe James has linked a number of papers on Prefblog that deal with changes in real rates. Nominal rates are only one factor, and not the main one.

My suspicion is that psychological factors (risk aversion) play a major part.

Added: see http://www.prefblog.com/?p=6630 for example on a paper.

Quote in Prefblog wrote:The simplest explanation is that deviations of the BEIR [Break Even Inflation Rate] from survey measures of inflation expectations are the result of some phenomenon other than changes in uncertainty regarding inflation.


Note that if risk aversion is a major factor, pricing will fluctuate due to exogenous (and likely unforcastable) events.


Liquidity is the big factor. The inlation risk factor will play a role, but it is small.

The big players need to be able to trade $100-million at a shot, particularly in times of stress. They need to be able to repo them instantly. Can't do that with RRBs.

It was the liquidity premium that sunk the Cleveland Fed's inflation forecasting model.

In all my writing about credit spreads and default risk, I stress that the bulk of corporate spreads to Canadas is due to liquidity concerns, not default. The intersting thing is that a retail investor can, if he so desires, hold governments while earning a little liquidity premium by holding RRBs.
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Re: New BMO ETFs

Postby Shakespeare » 16 Sep 2010 00:51

The big players need to be able to trade $100-million at a shot
Somehow I don't think I'm going to be a liquidity supplier....
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Re: New BMO ETFs

Postby Quebec » 04 Dec 2010 19:18

Shakespeare wrote: ZRE and may be interesting. ZRR has an MER of only 0.25% compared to XRB's 0.35%

I agree but there is only $5M in ZRR so far, and about $40M in ZRE. Let's wait a year or two to see if both of these ETFs survive and become more popular...
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Re: New BMO ETFs

Postby IdOp » 17 Jan 2011 17:46

From the "Don't shoot the messenger department", BMO Financial Group does the lemming Announces Changes in Distribution Frequency for BMO Exchange Traded Funds.

BMO Financial Group announced today that starting January 2011, BMO Exchange Traded Funds (ETFs)(i) will pay monthly distributions on 14 funds that previously paid distributions on a quarterly basis. Additionally, distributions on nine funds are changing from a quarterly basis to an annual basis.

(See link for details.)
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Re: New BMO ETFs

Postby ockham » 17 Jan 2011 21:12

IdOp wrote:From the "Don't shoot the messenger department", BMO Financial Group does the lemming Announces Changes in Distribution Frequency for BMO Exchange Traded Funds.

BMO Financial Group announced today that starting January 2011, BMO Exchange Traded Funds (ETFs)(i) will pay monthly distributions on 14 funds that previously paid distributions on a quarterly basis. Additionally, distributions on nine funds are changing from a quarterly basis to an annual basis.

(See link for details.)


This is one of those things I just don't get. I hope monthly distributions create efficiencies of some kind for the ETF manager, since for the investor they seem to me to range from somewhere around neutral to a royal PITA.
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Re: New BMO ETFs

Postby Bylo Selhi » 17 Jan 2011 21:23

ockham wrote:This is one of those things I just don't get. I hope monthly distributions create efficiencies of some kind for the ETF manager, since for the investor they seem to me to range from somewhere around neutral to a royal PITA.

+1

This bone-headed move just confirms my original decision to not waste any time taking a look at BMO's ETFs.
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Re: New BMO ETFs

Postby like_to_retire » 17 Jan 2011 22:10

Bylo Selhi wrote:This bone-headed move just confirms my original decision to not waste any time taking a look at BMO's ETFs.

But many ishares and Claymore ETF's also have converted to monthly distributions.

Hard to avoid these days.

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Re: New BMO ETFs

Postby Bylo Selhi » 17 Jan 2011 22:22

like_to_retire wrote:But many ishares and Claymore ETF's also have converted to monthly distributions.

Yabbut that doesn't make BMO's move any less bone-headed. At least for now, XIU remains in the quarterly camp.
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Re: New BMO ETFs

Postby queerasmoi » 18 Jan 2011 04:11

AUGH!!! And I *just* switched an iShares ETF over to a BMO ETF for this exact damn reason. And now, once again, yet another ETF I own will drop out of having a large enough distribution to reinvest.

Simple formula for minimum investment required to DRIP one share: Investment = (share price)² ÷ (distribution amount)

For ZPS which I just bought into, on quarterly distributions, 14.80² ÷ 0.16157 = $1355.69
On monthly distributions, it becomes $4067.09 (I do own more than this much of ZPS, so it will DRIP).
For ZCS which I bought last year, I specifically purchased an amount that would be enough to DRIP at least one share quarterly. 14.91² ÷ .164844 = $1348.60. On monthlies, it becomes $4045.79 which is greater than the amount I invested in that ETF. Boo, what a waste...

XCB I was never able to DRIP at Credential, but at Questrade I can do it now, as the cash yield is high enough. Monthly: 20.49² ÷ .08068 = $5203.77; and I do own just a tad more than that much.
XSB is what I sold because of this particular math. Monthly: 28.82² ÷ 0.08107 = $10425 which is much more than I had invested in that fund.

Anyway... yeah this definitely goes into the "royal PITA" category. What about those of use who *want* less frequent distributions? In any case I did anticipate a bit of un-reinvestable cash, so when I bought into ZPS this week I dipped into about $150 of non-registered margin. Questrade doesn't charge interest in any month where it'd come out to less than $1, so I'll just let the un-reinvested dividend money pay back that balance.
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Re: New BMO ETFs

Postby marty123 » 18 Jan 2011 13:40

Bylo Selhi wrote:
ockham wrote:This is one of those things I just don't get. I hope monthly distributions create efficiencies of some kind for the ETF manager, since for the investor they seem to me to range from somewhere around neutral to a royal PITA.

+1

This bone-headed move just confirms my original decision to not waste any time taking a look at BMO's ETFs.

We've seen it with iShares and we're now seeing it with BMO. I think they see it as a feature that helps retirees get a regular cashflow out of their investments. Most people can't plan around quarterly cashflow influx, so they'd probably welcome this kind of move.
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Re: New BMO ETFs

Postby Bylo Selhi » 18 Jan 2011 14:06

marty123 wrote:I think they see it as a feature that helps retirees get a regular cashflow out of their investments.
Yabbut at the expense of people in the accumulation phase who (should!) want to minimize transactions, to DRIP, etc., i.e. to transact as little and as cheaply as possible. ISTM quarterly distributions are a reasonable compromise between the needs of retirees for cash flow and the need for everyone else to make things as simple as possible.

Regular cashflows for undisciplined retirees is one explanation. Another is that the brokerage industry prefers to see as many transactions from ETFs as possible (call it "smoke") so that they can promote the sort of hypertrading idiocy that people like Bogle condemn (call that profitable [for them] "fire.")

Besides, dividend-paying common stocks generally pay out quarterly without squawking from the cashflow planning challenged. Why should ETFs be any different?

Maybe the ETF sponsors could revert to quarterly distributions that are staggered a month apart, e.g. their bond ETFs pay out in Jan, Apr, Jul and Oct, their Can equity funds pay out in Feb, May, Aug and Nov, and Int equity in Mar, Jun, Sep and Dec, etc. That would provide regular cash flows for people with reasonably diversified portfolios with quarterly payouts from each ETF.
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Re: New BMO ETFs

Postby queerasmoi » 18 Jan 2011 14:36

So let me ask: Are there *any* fixed-income ETFs left now in Canada that do not spit out monthly distributions?
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Re: New BMO ETFs

Postby like_to_retire » 18 Jan 2011 16:00

queerasmoi wrote:So let me ask: Are there *any* fixed-income ETFs left now in Canada that do not spit out monthly distributions?

If there are, they won't likely be that way long. This change is catering to the boomer generation (of which I'm a charter member) need for timely income in retirement. Personally I find it a pain, since it just makes extra work for me with my records.

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Re: New BMO ETFs

Postby Shakespeare » 03 Feb 2011 11:59

BMO eyes income investors with ETFs
Bank of Montreal is rolling out 10 more exchange-traded funds as competition continues to heat up during the registered retirement savings plan (RRSP) season.

This launch, which boosts the bank’s ETF offerings to 40, focuses on income and commodity themes...

The income-oriented ETFs, which will be listed on the Toronto Stock Exchange on Thursday, include four portfolios of corporate bond ETFs, whose assets will shift into money market securities like Treasury bills as the maturity dates gets closer.
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Re: New BMO ETFs

Postby queerasmoi » 03 Feb 2011 14:05

Oh dear... introducing BMO's new *most thinly traded ever* ETFs! Guaranteed to make sure you will never benefit from any liquidity advantage!

Regarding the target date bond ETFs, I wonder whether they will a) simply hold shares of a bond ETF inside of them and sell it over time, or b) actually hold bonds that mature before the target date, and allow them to reach maturity within the bond fund?
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Re: New BMO ETFs

Postby ThinkDividends » 03 Feb 2011 18:03

queerasmoi wrote:Regarding the target date bond ETFs, I wonder whether they will a) simply hold shares of a bond ETF inside of them and sell it over time, or b) actually hold bonds that mature before the target date, and allow them to reach maturity within the bond fund?



Yes - The target date Bond Funds will hold the other BMO Bond ETFs. For example the BMO 2025 Corporate Bond Target Maturity ETF is 52% the BMO Long Corp Bond Index and 47% the BMO Mid Corp Bond Index.



http://cawidgets.morningstar.ca/ArticleTemplate/ArticleGL.aspx?id=368777
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Re: New BMO ETFs

Postby adrian2 » 04 Feb 2011 09:32

queerasmoi wrote:Oh dear... introducing BMO's new *most thinly traded ever* ETFs! Guaranteed to make sure you will never benefit from any liquidity advantage!

Depends which side of the trade you are :) . I prefer securities with high spreads and low volume so I can sell liquidity.
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Re: New BMO ETFs

Postby queerasmoi » 09 Feb 2011 05:04

For those of you who own BMO ETFs with monthly distributions...

Have you received the February 7th pay date distributions yet? I still don't see them in Questrade but they've recently "upgraded" their system. I don't know whom to blame yet.
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Re: New BMO ETFs

Postby gerrie » 09 Feb 2011 21:10

Yes! ...TD paid ZUT 300 units dividend on Feb 7

Sett Date Qty Description Type/Price Comm Net Amt
Trade Date 07-Feb-2011
07-Feb-2011 300 BMO EQL WGT UTIL INDX ETF
TXPDDV $0.00 $19.50
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Re: New BMO ETFs

Postby queerasmoi » 09 Feb 2011 23:06

Okay so I guess it must be Questrade's fault then. It seems that their new my.questrade.com account portal only updates account data once per day, from 10 PM to 2 AM Eastern. During those hours, no account activity is visible. Still that wouldn't explain why two days after pay, I still don't see it. I will check again tonight (after 11 PM Pacific).

EDIT: Yup my cash balance went up. Still can't see the actual transactions until 2 AM Eastern but now I know it's there.
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Re: New BMO ETFs

Postby BRIAN5000 » 26 Mar 2011 14:59

What's the matter with ZAG ?
Canadian BMO Aggregate Bond Index ETF
http://www.etfs.bmo.com/bmo-etfs/glance?fundId=75742
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Re: New BMO ETFs

Postby queerasmoi » 26 Mar 2011 16:17

BRIAN5000 wrote:What's the matter with ZAG ?
Canadian BMO Aggregate Bond Index ETF
http://www.etfs.bmo.com/bmo-etfs/glance?fundId=75742

I'm not sure what you're getting at... has it been behaving strangely?
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Re: New BMO ETFs

Postby Bylo Selhi » 26 Mar 2011 16:21

Maybe it's been ZIGing when it should be ZAGing? ;)
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Re: New BMO ETFs

Postby BRIAN5000 » 26 Mar 2011 16:44

queerasmoi wrote:
BRIAN5000 wrote:What's the matter with ZAG ?
Canadian BMO Aggregate Bond Index ETF
http://www.etfs.bmo.com/bmo-etfs/glance?fundId=75742

I'm not sure what you're getting at... has it been behaving strangely?


No I just had a quick look at it. Everyone seems to be bashing BMO's ETF's. This one seems pretty good?

It would be better if there was a Zig then I could buy both zig & zag !
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Re: New BMO ETFs

Postby marty123 » 28 Mar 2011 10:53

ZAG's matches NAV based on the underlying index. The index trend seems to reflect the market trend for similar securities. It more-or-less matches TDAM bond index' 12-month history.
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