BMO fixed-income ETFs will soon be the cheapest

Morningstar Canada 16 June, 2016 | 4:00AM
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By the slimmest of margins, the BMO family of exchange-traded funds will soon have the two Canadian-listed fixed-income ETFs with the lowest management fees.

BMO Asset Management Inc. announced today that it will slash the management fees of BMO Aggregate Bond Index ZAG and BMO Discount Bond Index ZDB to nine basis points (0.09%), down from their current 20 basis points. This will leave the two BMO ETFs one basis point cheaper than two ETFs sponsored by Vanguard Investments Canada Inc. and one sponsored by TD Asset Management Inc.

The management fee for a third BMO fixed-income ETF -- BMO Short Corporate Bond ZCS -- will be reduced to 10 basis points, down from the current 0.12%.

At the same time, BMO is reducing the management fee on BMO S&P 500 Index ZSP/ZSP.U and BMO S&P 500 Hedged to CAD Index ZUE to eight basis points, down from 12. This will leave the BMO U.S. ETFs with fees that are tied with their Vanguard competitors, and just one basis point higher than the price-leading iShares ETFs in the U.S. Equity category.

The fee reductions for all five BMO ETFs are scheduled to take effect on or about June 22. Kevin Gopaul, BMO Asset Management senior vice-president and global head of BMO ETFs, said in a release that the fee reductions demonstrate BMO's commitment to providing its clients with low-cost solutions.

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