This is a sponsored post written by me on behalf of BMO. All opinions are 100% mine.

The emergence of online portfolio management has begun to reshape the investment landscape in Canada and the U.S. The market is estimated to reach assets under management of $300B in North America by 2020. With more than half of Canadians currently using the Internet as their primary way to bank (including 57 per cent of Millennials and half of Boomers) it’s no surprise to see Canada’s big banks start to enter the fray.

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The first of which is BMO’s new SmartFolio service. Billed as a personalized digital portfolio management service, SmartFolio is aimed at Canadian investors who prefer to take a hands-free approach to investing, who want access to their portfolio from a computer, tablet, or smart-phone, and who have as little as $5,000 to invest.

BMO reached out and asked me to take a look at their new SmartFolio service. I started by taking the investor profile questionnaire, answering a series of personal and investment questions such as, how much of a loss would you be financially and emotionally able to accept. After completing the 10 questions I was presented with one of SmartFolio’s five recommended model ETF Portfolios:

  • BMO SmartFolio Capital Preservation Portfolio
  • BMO SmartFolio Income Portfolio
  • BMO SmartFolio Balanced Portfolio
  • BMO SmartFolio Long Term Growth Portfolio
  • BMO SmartFolio Equity Growth Portfolio

Clients have access to some of the most attractive and cost efficient ETF offerings available as well as active portfolios managed by BMO experts.  

The recommended option for me was the Equity Growth portfolio with a asset mix of 90% equities and 10% fixed income: 

The equity component included a broad range of ETFs from Canada, the U.S., and other global markets.

The fixed income component was made up entirely of ZMU, BMO’s Mid-Term US IG Corporate Bond Hedged to CAD Index ETF.

A team of portfolio managers monitor the model ETF portfolios every day, and rebalance where and when required, to keep clients on track with their investment objectives.

SmartFolio’s advisory fee is based on a percentage of your assets and includes all trading costs. As with other online portfolio managers, there’s an additional charge to cover the ETFs that are held within your portfolio. Expect the ETFs used to build your portfolio to have a weighted-average MER of 0.20% to 0.35% of the value of your SmartFolio account.

There’s a minimum quarterly advisory fee of $15, which is waived if you deposit $250 or greater into your account during that calendar quarter.

An investor with a $75,000 portfolio can expect to pay $525 a year, plus the cost of the ETFs held in their portfolio. That puts their total annual advisory fee in the affordable 0.90% to 1.05% range.

An investor with $250,000, on the other hand, would expect to pay $1,600 a year, plus the cost of the ETFs held in their portfolio. The advisory fee is lowered to 0.64%, which would keep their total annual fee, including investment costs, under 1 percent.

SmartFolio is currently set up to offer investment accounts (individual cash only), RRSPs, Spousal RRSPs, and TFSAs, and will be adding RESPs, LIRAs, and joint accounts in the coming months.

Final thoughts

BMO’s SmartFolio service represents a continuing shift in the investment industry as investors seek more affordable and effortless investing solutions. Affordable ETFs combined with smart portfolio management gives investors piece of mind without the hassle of trying to do it all themselves or paying 2% or more for a similar portfolio of mutual funds.

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2 Comments

  1. Louis Aiello on February 13, 2016 at 9:43 am

    These BMO investments seem to be invested in mutual funds. Is this correct?
    If it is in mutual funds , is there idden EMR of 2% +plus your fees of 0.7 to 1.1%.

    I friend of mine e-mailed me the info. But I am confused on how it is invested and how they work. How safe are they invested what is the average return on your investments and what are the risks. I am of retirement age.
    Thank you,
    Louis Aiello

    • Echo on February 13, 2016 at 10:50 am

      Hi Louis, BMO has its own proprietary suite of low-cost ETFs. You can view the list here – http://www.bmo.com/gam/ca/advisor/products/etfs

      As I mentioned in the review, the ETFs used to build your portfolio will add approximately 0.25% to 0.35% on top of the 0.7% advisory fee. So you’re looking at about 1% for a managed and diversified portfolio of ETFs.

      Take a look at this Canadian Online Investment Fee Calculator, complete with cost analysis of 10 different robo-advisor platforms and other managed portfolio options: https://docs.google.com/spreadsheets/d/14wMiTNkRxlwzaqwUYLgjQSyfGU4hfEbop6cpNCF0tTo/edit#gid=0

      BMO SmartFolio ends up somewhere in the middle when it comes to costs, although there are many variables and inputs to consider. It’s certainly worth a look if you’d prefer to stay with a big bank but want to avoid high MER mutual funds and don’t have the temperament or skill (or desire) to trade individual stocks.

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