Fund Teams Face Off: BMO vs. TD vs. RBC

How do portfolio manager teams compare at these big Canadian banks?

Danielle LeClair 24 March, 2023 | 4:02AM
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Toronto Financial District

BMO’s Global Asset Management business is on the rise in Canada. They’ve added more than 70 investment professionals in less than two years and already dominate the ETF market – so how do they stack up against peers?

Let’s look at recently updated Morningstar Parent Ratings for the fund management teams at BMO, TD and RBC:

BMO Global Asset Management: Average Parent Rating

BMO GAM’s decade-long globalization initiative saw a sharp reversal in 2021 after it sold its non-Canadian business to expand its team and capabilities in Canada. The decision makes sense – Canada has been its most successful market, but the quick turn in strategy warrants some caution, earning it an Average Parent Rating. Historically in Canada, BMO GAM’s ETF business has outshined its mutual fund business which faced performance challenges and stands to benefit from expanded investment and operational resources. The firm expects to broaden its line-up, balancing core and innovative options for investors, such as adding tactical tilts to some balanced portfolios and newly developed alternative investment capabilities.  The newly assembled team is highly experienced but so far is unproven as a combined group.

TD Asset Management: Above Average Parent Rating

TDAM's cohesive culture and investor-focused mentality results in wide-ranging mutual funds and ETF menus that highlight the firm’s investment strengths, earning it an Above Average Parent Rating. The firm’s conservative focus on risk management leads it to offer investors core building block strategies rather than trendy approaches that have lower odds of serving investors' long-term interests. There has been some turnover at the executive level, but internal investment professionals have been able to fill these roles seamlessly and maintain the continuity of TDAM’s investment philosophy and style. TDAM’s international pursuits complement its Canadian business which, like BMO GAM is its primary focus.

RBC Global Asset Management: Above Average Parent Rating

RBC GAM is Canada’s largest asset manager with a network of resources and a selection of high-performing mutual funds and ETFs, earning it an Above Average Parent Rating. Unlike BMO GAM today, RBC GAM has relied on acquisitions as well as natural expansions to enhance its investment options. A strategic alliance with Blackrock in 2019 provides Canadians access to one of the world’s biggest and best -known ETF suites, and makes RBC GAM a key competitor for BMO’s ETFs. RBC GAM’s star-manager system, which leaves strategies vulnerable to the risk of processes changing when managers turn over, raises some cultural questions.

Giants like RBC and TD are among the strongest asset managers in Canada that BMO will need to compete with, as it addresses historical performance challenges and re-educates investors about its investment philosophy and process. But for investors, having another Canadian-focused mega-player is something. Let’s see how they compare:

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Danielle LeClair  Danielle LeClair is Director of Manager Research for Morningstar Canada

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