18 Aug BMO Guardian Monthly High Income Fund: What You Need to Know

In this issue I’d like to talk about one of my flagship funds – the BMO Guardian Monthly High Income Fund II.

The BMO fund has been around since October 2002. In the post 9/11 world it seemed Canada represented one of the last secure places in the west in which to invest. In my own practice I had taken advantage of the decline in markets to reposition into Funds focussing on Canadian dividend paying blue chip companies. The move paid off, and if you had taken my advice back then your portfolio may have seen annual returns in the double digits ever since. There have been a few major contenders since 2002, but the BMO fund is one of the few to endure in ways other funds have not.

One of the things I like about the BMO fund is the regular monthly income. This fund pays out 6 cents per share per month. That may not seem like a lot, but over one year that equals 72 cents per share. Each month, the existing capital, plus the re-invested dividend from the previous month work to produce more dividends. At today’s price of around $14/share, that amounts to a 5% income yield. But it doesn’t end there!

The BMO fund invests in high quality Canadian companies. Roughly 94%* of the fund is held in Canada. Two of Canada’s greats strengths come from the financial and energy sectors. These two make up the major portion of the fund and are responsible for much of it’s double digit returns over the years. Careful, yet clever management has produced returns superior to many of it’s competitors. It would seem natural to expect a certain degree of risk with this fund, yet year over year the fund has maintained a moderate rating.

But what good are great returns if they come at high cost. For certain we expect to get what we pay for. There are many funds that can justify their fees by their excellent returns. But there are few funds that can boast both. The BMO fund is one of them, and at approximately 1.76%* or better, in the no load option there are few that can surpass it.

See for yourself what the performance of the BMO Guardian Monthly High Income Fund II has done over the last 10 years, and you’ll understand why I use this fund as a core holding.

Calendar Year Returns as of 30/06/2016

Annual Compound Returns as of 30/06/2016

Of interest is how the fund is not only beating the TSE (see below), but that it is outperforming it’s peer group and places in the top quartile consistently.

If you have any questions about this fund, please feel free to contact me.