BMO’s low-cost sustainable fund range records strong debut year

by Hannah Smith from interactive investor |

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This BMO range is endorsed by interactive investor as part of our quick-start fund choices for beginner investors.

BMO Global Asset Management’s low-cost multi-asset portfolios (which cost 0.35% for interactive investor customers) have attracted £100 million in assets and returned as much as 14% in their first year since launch.

The group’s Sustainable Universal MAP range of funds offer investors a combination of multi-asset and responsible investing through three risk-targeted products: Cautious, Balanced, and Growth. They are run by BMO’s multi-asset team.  

In September 2020, we introduced three BMO funds to the interactive investor quick-start range for beginner investors. We have a total of six funds in the range, with the other three funds passively managed by Vanguard.

In terms of performance, the funds have had a strong start in their first year. BMO Sustainable Universal MAP Cautious returned 12.6%, while the BMO Balanced fund delivered 14% and the BMO Growth fund 14.1% over the period.

Engagement to drive change

The funds are managed according to BMO’s ‘Invest, Avoid, Improve’ framework, which includes a focus on sustainability, impact investing, ESG factors and exclusions.

As part of a move to drive positive change among company management teams, over the last year BMO has engaged with 58 companies and recorded 37 ‘milestones’ – instances where a company changes its practices following active engagement. BMO says milestones it has hit relate to governance, climate change and environmental standards. For example, one company pledged to become net carbon negative by 2030 after dialogue with BMO’s investment team.

“BMO GAM has a strong heritage in sustainable investing, launching Europe’s first ethically screened fund in the early ‘80s,” says Simon Holmes, lead manager of the BMO Sustainable Universal MAP range.

“Active management and sustainable solutions do not have to cost the earth. By keeping costs for the range low, we are opening up sustainable investing to a broader pool of investors.”

ii’s view

In September 2020, the three BMO funds were introduced to the quick-start range. The decision to increase the number of funds in the range was to give beginner investors more choice in terms of funds and approach, given that the three BMO funds are actively managed, which means they have the potential to deliver better performance (although there are no guarantees). 

Following a comprehensive review of multi-asset active funds, the ii investment selection committee was drawn towards funds that invest with ESG (environmental, social and governance) principles. 

The three BMO funds stood out from the competition due to their sustainable investment philosophy, how the funds invest and manage risk, as well as BMO’s focus on low costs, with an ongoing charge of 0.35%. Other funds considered were not as competitive on fees. 

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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