Active management at passive prices · Final portfolio A fresh perspective from a proven management...

A groundbreaking investment solution from BMO Global Asset Management

Active management at passive prices– that’s extraordinary

BMO Universal Multi-Asset

Portfolio range

Multi-Asset Solutions For professional investors only

The investment world has seen wave after wave of change in recent years, with ever more regulatory scrutiny on suitability and costs. Together with pension freedoms, these changes have created a market that is asking for low-cost solutions and getting mainly passive answers. A situation that needs real innovation to broaden investor choice.

Pension freedoms

Growing price constraints/ sensitivities

20152013

Move to transparent

adviser charging

RDR**

Auto enrolment

begins

FSA focus on CIP*

2012

FSA Risk &Suitability

2011

FCA platform rebate ban

2014

‘Weak price competition in a number of areas of the asset

management industry’

The FCA Asset Management (AM) Market Study found:

2017

FCA AM Market Study

FCA FAMR*** Report

2016

PROD*****

2019

* CIP = Centralised Investment Proposition** RDR = Retail Distribution Review*** FAMR = Financial Advice Market Review **** MIFID II = The Markets in Financial Instruments Directive***** PROD = Product Intervention and Product Governance Sourcebook

Extraordinary times need extraordinary solutions

BMO Global Asset Management2

MiFID II****

2018

The ability to actively manage at passive prices – now that is extraordinary

BMO Global Asset Management has always sought to respond to market needs. Now investors are able to select an active low-cost solution, which aims to ensure that while their risk tolerances are being managed, their investment is seeking to deliver on their return expectations.

Capped at 0.29% OCF (Ongoing Charges Figure) for an actively managed, risk-targeted multi-asset solution, the BMO Universal Multi-Asset Portfolio (MAP) range is groundbreaking and designed to meet advisers’ current needs.

The value of investments and any income from them can go down as well as up and investors may not get back the original amount invested.

In response to the changing market place, most providers offer investors a binary choice - low-cost OR active. BMO Global Asset Management provides something uniquely different.

The growth of passive fundsThe solution to the low-cost challenge from many multi-asset providers has been portfolios mostly based around passive products. Passives have a role to play as they offer exposure to the stock market at a low cost. This is good news when markets are rising. However, unlike many ‘active’ managers, they typically offer little opportunity to out-perform the markets they track and perhaps more importantly, offer little or no protection when that market is falling.

Change requires innovatorsIn the provision of low-cost active solutions, there has been little in the way of innovation from the investment industry. Why is this? Because to meet these demands calls for the rare combination of scale, a breadth of investment capabilities, and a culture of innovation.

BMO Universal Multi-Asset Portfolio range

BMO Global Asset Management 3

BMO Universal MAP rangeIntentionally extraordinary


Source: BMO Global Asset Management as at 22.05.18. *CPI = Consumer Price Index. Return expectations are derived from a combination of the modelled historical asset allocation and return expectations for each asset class. Return expectations for each asset class are based on current yield for fixed income assets and a combination of dividends and gross domestic product (GDP) growth for equities. The value of investments and any income from them can go down as well as up and investors may not get back the original amount invested.

Our new multi-asset solution has costs capped at 0.29% OCF by investing mainly in internal managers. It is an institutional calibre product that is universally available. These globally diversified portfolios invest in individual securities, derivatives, collective schemes and exchange-traded funds (ETFs). Five of the funds aim to deliver a steady, long-term, risk-controlled return, while the sixth is designed to yield a regular, annual income of 4.0 – 4.5%.

The range has been designed on three key principles. Capital is at risk and investors may not get back the original amount invested.

risk-controlled – CPI + return expectation

cost-focused – capped 0.29% OCF designed to meet the need for high quality, low-cost investment solutions

active – combining strategic and tactical allocations with individual stock selection

Investment objective

Target volatility framework (rolling 10 years)

Annualised return expectation (5 years+)

Typical asset class range Equities

Typical asset class range Fixed Income

OCF

Dynamic Planner risk profile

BMO Universal MAP Growth Fund

BMO Universal MAP Balanced Fund

BMO Universal MAP Cautious Fund

BMO Universal MAP Defensive Fund

Long-term growth consistent with a medium to high volatility level over the long term

10% – 12%

CPI+ 4%

50 – 70%

30 – 50%

0.29% capped

6

Long-term growth consistent with a balanced volatility level over the long term

8% – 10%

CPI+ 3%

40 – 60%

40 – 60%

0.29% capped

5

Long-term growth consistent with a cautious volatility level over the long term

6% – 8%

CPI+ 2%

30 – 50%

50 – 70%

0.29% capped

4

Long-term growth consistent with a defensive volatility level over the long term

4% – 6%

CPI+ 1%*

15 – 35%

65 – 85%

0.29% capped

3

Six portfolio options

The BMO Universal MAP range offers six portfolios, which cover over 98% of investor risk profiles.


The BMO Universal MAP range offers six risk-controlled portfolio options – from Defensive to Adventurous – designed to cover a range of client needs. Most importantly, each portfolio is actively managed, and at low cost.

BMO Universal MAP Adventurous Fund

Long-term growth consistent with a high volatility level over the long term

12% – 14%

CPI+ 5%

75 – 95%

5 – 25%

0.29% capped

7


BMO Universal MAP Income Fund

Steady annual income that is risk controlled

8% – 10%

CPI+ 3%

40 – 60%

40 – 60%

0.29% capped

5


Extraordinary reasons to invest

Low-cost solution designed for cost constrained

applications.

0.29%

OCF capped

Active management

Dynamically adjusted and managed asset allocation

and stock selection.

Long-term growth or regular income

Choice of 6 funds offering long-term growth or a steady annual income.

Risk-controlled focus

Managed to maintain each fund’s risk

profile.

Return expectation

Each portfolio expecting to deliver CPI +

returns.

Risk-targeted

Actively aligned to leading risk profile tools.

Globally diversified

Allocated globally across equities and

fixed income.

Institutional calibre

Access to our in-house global investment

capabilities.


Example portfolio construction


Portfolio breakdown The range is actively managed and mapped to pre-determined risk profiles. It invests in global equities and fixed income in different degrees to reflect various risk profiles. The portfolios are also mapped to leading risk-profiling companies.

For illustrative purposes only


UK equities

European equities

Japanese equities

North American equities

Pacific ex Japan equities

Emerging market equities

UK corporate bonds

UK index linked gilts

US corporate bonds

High yield bonds

UK equities

European equities

Japanese equities

North American equities

Pacific ex Japan equities

Emerging market equities

UK corporate bonds

UK gilts

Cash

Global High Yield Bonds

BMO Universal MAP Cautious Fund

BMO Universal MAP Defensive Fund

BMO Universal MAP Balanced Fund

BMO Universal MAP Adventurous Fund

BMO Universal MAP Growth Fund

BMO Universal MAP Income Fund

£30bn+

globally managed in multi-asset*

* Source: BMO Global Asset Management 30.06.19 ** Source: BMO Financial Group, total assets in CA$ Q2 Financial Year 2018/19 AUM

as at 30 April 2019

By allocating mandates to in-house managers, we avoid double charging. Our proven institutional capabilities in multi-asset investing has enabled us to launch a retail product at an institutional price point.

The range is managed by our expert Multi-Asset team. The carefully constructed team has a wealth of experience developing multi-asset solutions for institutional clients. In constructing the portfolios, they will be utilising the considerable investment expertise from across the business.

We are a global investment manager with offices in more than 25 cities in 14 countries, delivering a high level of service to clients across five continents.

Our four major investment centres in Toronto, Chicago, London and Hong Kong are complemented by a network of world-class boutique managers strategically located across the globe including: BMO Real Estate Partners, LGM Investments and Pyrford International Ltd.

BMO Global Asset Management manages total assets of over £197+ billion, as of 31 March 2019 and is a part of the BMO Financial Group, a highly diversified financial services provider based in North America with total assets of over CAD $830 billion**.

Past performance should not be seen as an indication of future performance.

Why we can achieve the extraordinary

BMO Global Asset Management has been able to launch the BMO Universal MAP range because of our scale and the depth of our resource in multi-asset investing. We manage over £30 billion* in multi-asset portfolios. Our 28-strong multi-asset team has successfully run investment strategies for decades, predominantly in the institutional market place, to meet the needs of pension schemes, global institutions, trusts and charities.

18average years experience

Providing solutions since

1994



Toronto12 professionals

London10 professionals

Chicago6 professionals

BMO Global Asset Management one of the world’s leading financial services providers


Equity Fixed Income Alternatives and FX

Source: BMO Global Asset Management as at 30-Jun-19. FX = Foreign Exchange.

Our Multi-Asset team

£62.6bn £70.0bn £7.7bn



Active investing with institutional rigourOur team has access to our global investment expertise, and allocates investment mandates to our managers. Our investment process has three important components:

Strategic asset allocationOur strategic asset allocation provides the foundation for your potential long-term returns. It is the main lever of our investment process and aims to position the portfolios appropriately with a long-term perspective of the economic cycle. We take an evolutionary approach to this process, with quarterly reviews rather than annual. This allows for further minor shifts in the approach, ensuring we keep within volatility levels.

The top down asset allocation process uniquely combines our proven and independently assessed quantitative process, with a qualitative evaluation by our team. As we do not outsource the asset allocation process, we have more flexibility within our permitted ranges of assets. Importantly, this process has been independently assessed by leading risk-rating providers.

Manager selectionWe choose managers who we believe have the experience and expertise to select the best securities. We look for top in-house managers who have a long track record of beating benchmarks.

Tactical asset allocationOur tactical asset allocation is reviewed monthly because, as we have often seen, events can occur at any time in the cycle. Being active can help increase return and reduce risk within the portfolios when events occur.

The Multi-Asset team, along with asset class specialists, review:

asset class allocation between equities and bonds on a global basis

geographical allocations within equities

sub-asset class allocations within fixed income

The BMO Universal MAP range is actively managed on a regular basis at every level. A major achievement for a low cost multi- asset solution.

Strategic asset allocation

Manager selection

Tactical asset allocation

Medium-term positioning

Active/passive security selection

Final portfolio

A fresh perspective from a proven management team

At BMO Global Asset Management we have a core belief that active management adds value, and this is particularly true when the economic outlook is more unsettled. Our active approach is forward looking and designed to give us flexibility, the ability to respond to events, while also benefiting from a robust and disciplined process.


Our range provides you with greater choice in the growing price-sensitive areas of financial planning and has been developed to meet a range of practical applications:

Designed to meet all major investment applications

defined benefit (DB) transfers

auto-enrolment

re-addressing passive bias in client portfolios

Income - clients looking for a regular income

client seeking value with performance potential

plugged-in solutions: a cost-focused proposition within a central investment process

blending: low-cost active or natural income, to sit alongside other solutions Widely available

on most leading platforms

Fund Name ISIN SEDOL MEX

BMO Universal MAP Defensive C Acc GB00BK5Z9D52 BK5Z9D5 BMAAFV

BMO Universal MAP Cautious C Acc GB00BF99VY38 BF99VY3 IQOWC

BMO Universal MAP Balanced C Acc GB00BF99W060 BF99W06 IQOWG

BMO Universal MAP Growth C Acc GB00BF99W284 BF99W28 IQOWK

BMO Universal MAP Adventurous C Acc GB00BK5Z9G83 BK5Z9G8 BMAAFX

BMO Universal MAP Income C Acc GB00BK5ZC697 BK5ZC69 BMAAFR

BMO Universal MAP Income C Inc GB00BK5ZC812 BK5ZC81 BMAAFP

Understand portfolio risks – risk magnitude portfolio-wide risk from predefined risk factors, volatility analysis and stress tests specific risks from individual positions/strategies

Views – likelihood of risks becoming reality future events e.g. elections, monetary policy other concerns e.g. geopolitical risks, market dynamics

Identify best course of action if risk mitigation is required

diversify reduce exposures

use of options

Risk management

All funds have been risk aligned to major asset allocation tools and the risk profiles can be found on the website www.bmogam.com/gb-en/intermediary/capabilities/ multi-asset/bmo-universal-map-range



Intermediary Sales Support

0800 085 0383

[email protected]

bmogam.com/adviser

Telephone calls may be recorded.

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This financial promotion is issued for marketing and information purposes only by BMO Global Asset Management in and the UK.The Fund is a sub fund of BMO Investment Funds (UK) ICVC III, an open ended investment company (OEIC), registered in the UK and authorised by the Financial Conduct Authority (FCA).English language copies of the Fund’s Prospectus and English language copies of the key investor information document (KIID) can be obtained from BMO Global Asset Management, Exchange House, Primrose Street, London EC2A 2NY, telephone: Client Services on 0044 (0)20 7011 4444, email: [email protected] or electronically at www.bmogam.com. Please read the Prospectus before taking any investment decision.The information provided does not constitute, and should not be construed as, investment advice or a recommendation to buy, sell or otherwise transact in the fund.

© 2019 BMO Global Asset Management. Financial promotions are issued for marketing and information purposes; in the United Kingdom by BMO Asset Management Limited, which is authorised and regulated by the Financial Conduct Authority; in the EU by BMO Asset Management Netherlands B.V., which is regulated by the Dutch Authority for the Financial Markets (AFM); and in Switzerland by BMO Global Asset Management (Swiss) GmbH, which is authorised and regulated by the Swiss Financial Market Supervisory Authority (FINMA). 799259_G19-2445 (10/19). UK

Active management at passive prices · Final portfolio A fresh perspective from a proven management...

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