BMO Strategic Equity Yield Fund BMO95290

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Looking at the above fund which utilizes structured notes as part of its investment philosophy. The fund is about to reach its one year anniversary and is paying a monthly coupon yielding approx. 11%annually The coupon payout as indicated in the prospectus may include capital repayment which in my mind may distort the actual yield of the coupon.
My questions:
How do I obtain a breakdown of what is included in the coupon payment?
Are there any drawbacks to investing in this fund?
Thanks
Scott

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Asked on June 17, 2024 10:08 am
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Private answer

Hey there. Typically these funds will release tax structures once a year. So for example, at the end of 2024 they'll release a breakdown of what the distribution was made up as. With the fund being so new, nothing to go off of really likely until the end of this year.

If I'm being completely honest, structured notes are suboptimal for a lot of investors. First, as always, one must invest in what they know. These are very complex derivative products that I'd venture to say the vast majority of investors simply don't understand. Secondly, they provide little downside protection unless the underlying capital is guaranteed, and they also provide relatively little upside. Fees are high, and returns are often poor.

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Posted by Dan Kent
Answered on June 17, 2024 8:13 pm
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