Question 1

What are the costs associated with mutual funds?

Accepted Answer

The cost of owning a fund is known as the Management Expense Ratio (MER) and includes all the costs of running the fund. MER includes the management fee, operating expenses and applicable taxes. The MER varies by fund and by series. Each fund may also be subject to a Trading Expense Ratio (TER). The TER represents the costs each fund spends on brokerage commissions for buying and selling the underlying investments. The MER and TER for each fund at the series level can be found on the most recently filed fund facts.

Question 2

How do I invest in BMO Mutual Funds?

Accepted Answer

You may choose to purchase BMO Mutual Funds through a Financial Advisor. A Financial Advisor is a person who is a representative of a Dealer, is registered with the securities authorities, handles the public’s orders to buy and sell securities and usually charges a commission for that service.

Question 3

How are mutual fund distributions taxed?

Accepted Answer

If you hold your investments in a registered account, generally neither you nor your registered plan is subject to tax on distributions. If you hold you investments in a non-registered account, distributions will be subject to tax whether they are received in cash or reinvested in additional securities. Generally, tax implications for mutual fund distributions are as follows: Dividends – generally treated as ordinary income and taxed at your marginal tax rate. However, where a mutual fund pays a distribution out of dividends received from Canadian companies, the investor can treat the distribution as if it were a dividend from a Canadian company. For investors who are Canadian resident individuals, this means that the distribution qualifies for the lower effective tax rate applicable to dividends from Canadian companies. Interest and Other Income – generally treated as ordinary income and taxed at your marginal tax rate.Capital Gains – if a mutual fund pays a distribution out of its net realized capital gains, an investor can usually treat the distribution as if it were a capital gain realized by the investor. Half of such a capital gain distribution has to be included in the investor’s income. Foreign Income and Foreign Tax Paid – if a mutual fund pays distributions out of income earned from foreign investments, an investor that pays Canadian tax may be able to claim a foreign tax credit for foreign tax paid by the mutual fund. Return of Capital (ROC) – this type of distribution is generally not taxable, but will decrease the adjusted cost base (ACB) of the securities. When the investor disposes of the securities, the lower ACB will increase the capital gain (or decrease the capital loss) that would otherwise result.

Question 4

Are mutual funds a safe investment?

Accepted Answer

Any investment comes with risk. Before you buy a mutual fund (or mutual fund portfolio) you should make sure that it matches your goals and risk tolerance. There are more conservative mutual funds that try to minimize risk, growth-focussed mutual funds that try to maximize your return and a variety of different options in between. Mutual funds are often considered safer than other investments because instead of only being tied to one asset (like a specific stock) they contain a pool of different investments. This is called diversification of risk.

Question 5

What are the different types of mutual funds?

Accepted Answer

There are lots of different kinds of mutual funds, each created to meet the goals of a particular type of investor. BMO Mutual Fund options include Security Funds, Equity Growth Funds, Income Funds, U.S. Dollar Funds, Growth Funds and other options. You can access the full mutual fund list here: https://www.bmogam.com/ca-en/products/mutual-funds/fund-list/

Question 6

What are mutual funds?

Accepted Answer

Mutual Funds are a pool of investors’ money invested on their behalf by a professional money manager in various securities. Mutual funds primarily invest in three broad types of asset classes: cash, stocks, and bonds, although alternative asset classes, such as derivatives, real estate or infrastructure, are becoming more commonplace.

Question 7

What is the minimum amount required to invest with BMO Mutual Funds?

Accepted Answer

For all accounts, except a RRIF account, the minimum initial investment is $500, and minimum subsequent investment is $50. For a RRIF account, the minimum initial investment is $5,000.For purchases of US Dollar funds, payment must be made in US currency.If you set up a Continuous Savings Plan (CSP), the minimum initial investment is $50 a month for all accounts.

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