BMO SmartFolio Review – Smart Digital Investing For All Canadians

Bank Of Montreal Or BMO is one of Canada’s leading banks with presence across the country. BMO SmartFolio is a product of BMO Nesbitt Burns. With that said, What exactly Is the Bank Of Montreal’s SmartFolio? There are a ton of investment firms in Canada with the likes of Questrade, Auto-Pilots, Wealthsimple, Mylo. So, how does BMO’s SmartFolio differ from these? Is it any better, if not how does it fare compared to others?

In this article let’s take a look at everything about the BMO SmartFolio has to offer and finally conclude if its the right product for you. Now, let’s get started.

What Is BMO SmartFolio?

BMO SmartFolio is an online portfolio management wing under BMO Nesbitt Burns, with professionals managing your money and investment portfolio.

Also, if you are looking for an affordable investment solution with professionals handing your account and finances, then BMO SmartFolio is the right product for you. It is not exactly like a Robo-Advisor, your hard-earned money is managed by professionals (or portfolio managers) at BMO and will look after your investments diversifying your invested money into appropriate portfolios – based on your preference and risk appetite.

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How Does SmartFolio Decide Your Portfolio?

During the signing up process, SmartFolio will ask you a series of questions to identify and determine your investment objectives and risk tolerance.

Upon completion of the sign-up process, you will be able to review the model portfolio presented to you by BMO SmartFolio.

Also, one of the registered representatives from BMO’s SmartFolio team will personally get in touch with you, evaluate your model portfolio and needs, make any necessary changes if required and only then will allocate the funds and make the investments on your behalf.

What Are The Account Types In The BMO SmartFolio?

Now that we know what BMO SmartFolio is, let’s take a look at the different account types offered and what it offers.

There are four account types supported:

1. TFSA (Tax-Free Savings Account)

2. RRSP (Registered Retirement Savings Plan)

3. RESP (Registered Education Savings Account)

4. RRIF (Registered Retirement Income Fund)

I’ll not be talking in detail on what is a TFSA or an RSSP account in this article. I have covered these topics extensively on this blog. Please search for the terms and you will find the related articles.

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BMO SmartFolio

BMO SmartFolio – TFSA

Here’s the list of features and benefits of the BMO SmartFolio TFSA Account

1. Based on your risk tolerance and investment objective, you’re matched with an ETF Portfolio by SmartFolio.

2. Your SmartFolio’s Investment portfolio is completely managed by a professional team at BMO, so be rest assured of legitimate and clean transactions by people who know what they do.

3. Also, you will also be able to access your account balance, holdings and performance round the clock from any device to track against your financial goals

4. The best part is – you can setup recurring contributions to your TFSA accounts, say, for example, you can set a $100 bi-weekly. auto-withdrawal. SmartFolio will take care of where to allocate the $100 (I mean under which ETF portfolio). Now that’s what I call – set it and forget it. It is a one-time thing, once you enable the auto-deposit, the system takes care of the rest.

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BMO SmartFolio – RRSP, RESP Investments

BMO’s SmartFolio RRSP and RESP Investments are pretty much the same as Investing in your TFSA’s (which we discussed in the previous segment)

Also, All of the features and benefits are pretty much the same.

Your money is invested in the BMO’s SmartFolio RRSP, RESP Accounts and managed by professionals.

BMO SmartFolio and RRIF – Quick Word

When you open a new SmartFolio RRIF account, you’re matched with a portfolio based on your needs, likely Capital Preservation or Income, depending on your risk tolerance.

Your money is then invested in a variety of BMO ETFs, and a team of Nesbitt Burns and BMO Global Asset Management portfolio managers monitor and adjust your holdings to take advantage of market fluctuations.

SmartFolio can be the perfect choice for your RRIF so that you can enjoy your retirement while financial experts look after your portfolio.

Here are a few more ways SmartFolio works well with an RRIF account:

1. Low management fees – As we all know, ETF portfolios typically have lower management fees and expenses than those associated with traditional investing. Depending on your investment account size, your advisory fees range from 0.4 to 0.7%.

SmartFolio fees are a percentage rather than a flat fee, your fees will continually decrease as you draw from your RRIF, leaving you more to achieve your dreams and enjoy the peaceful retirement.

2. Diversification – A well-diversified portfolio can help preserve your assets with lower risk, helping ensure they last through your retirement, while still taking advantage of overall market growth.

ETFs are already made up of a mix of stocks, bonds or other investments, which allows you to have a diversified portfolio at a lower cost than buying each investment individually.

As you withdraw from your RRIF, your portfolio will be automatically rebalanced, to keep your account on track.

3. Professional Investing – SmartFolio portfolios are actively managed by a team of investment experts who are committed to making sure your portfolio stays balanced and on track – and at a lower fee than what you’d pay with a traditional investing service.

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What Is An ETF? 

An ETF (Exchange-Traded Fund) is an investment fund that represents a basket of stocks, bonds or other investments. Unlike conventional mutual funds, an ETF is traded on a stock exchange and often tracks a market index or may have a specific investment strategy.

ETFs are an attractive investment as they are a low-cost option to build a well-diversified portfolio.

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What Are The Benefits Of Investing In SmartFolio ETFs?

1. Liquidity – through buying and selling during the trading hours of the stock exchange.

2. Diversification – potentially lower risk than individual securities.

3. Exposure – to a portfolio of stocks or bonds.

4. Portfolio transparency – on a daily basis.

5. Cost-efficiency – low management fees.

6. Tax efficiency – with potential low capital gains distributions.

SmartFolio Account Types

All this while we have been talking about the SmartFolio ETF Portfolios. In this section let’s look at the different ETF portfolios under the BMO SmartFolio and also look at the returns it generated since Inception.

BMO SmartFolio has five types of ETF Portfolios

1. Capital Preservation

2. Income

3. Balanced

4. Long Term Growth

5. Equity Growth

Now, let us look at each one in detail.

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1. Capital Preservation

The Capital Preservation Portfolio’s objective is to provide the safety of capital while generating income (interest, dividends and capital gains) with some exposure to investments that have the potential for better returns.

While at the same time, trying to minimize the effects of inflation by investing in exchange-traded funds (ETFs) that invest primarily in Canadian and foreign fixed income securities, and to a lesser extent, Canadian equity securities.

Target Asset Allocation

Equity – 10%
Fixed Income – 90%

Actual Asset Allocation

Fixed income: your money is more stable but with low to moderate gains

1. Corporate Bonds 40%

2. Government Bonds 43%

Equity: your money is more volatile but with the greatest potential for growth

1. Canadian Equity 7%

2. U.S. Equity 5%

3. International Equity 5%

4. Emerging Market Equity 0%

2. Income

The Income Portfolio’s objective is to provide some long-term capital growth by investing in exchange-traded funds (ETFs) that invest primarily in Canadian and foreign fixed income products, and to a lesser extent, exposure to Canadian and foreign equity securities.

Target Asset Allocation

Equities 30%

Fixed Income 70%

Actual Asset Allocation

Fixed income: your money is more stable but with low to moderate gains

1. Corporate Bonds 32%

2. Government Bonds 34%

Equity: your money is more volatile but with the greatest potential for growth

1. Canadian Equity 8%

2. U.S. Equity 19%

3. International Equity 7%

4. Emerging Market Equity 0%

BMO SmartFolio

3. Balanced Portfolio

The Balanced Portfolio’s objective is to strike a balance between the safety of principal and appreciation. This Portfolio seeks to provide long-term capital growth with some income (interest, dividends and capital gains) by investing in exchange-traded funds (ETFs) that invest primarily in Canadian and foreign equity securities and Canadian and foreign fixed-income securities.

Target Asset Allocation

Equities 50%

Fixed Income 50%

Actual Asset Allocation

Fixed income: your money is more stable but with low to moderate gains

1. Corporate Bonds 27%

2. Government Bonds 17%

Equity: your money is more volatile but with the greatest potential for growth

1. Canadian Equity 12%

2. U.S. Equity 30%

3. International Equity 10%

4. Emerging Market Equity 5%

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4. Long Term Growth Portfolio

The Long Term Growth Portfolio’s objective is to maximize returns over time by investing in exchange-traded funds (ETFs) that invest primarily in Canadian and foreign equity securities and to a lesser extent some exposure to Canadian and foreign fixed-income securities.

Target Asset Allocation

Equities 70%

Fixed Income 30%

Actual Asset Allocation

Fixed income: your money is more stable but with low to moderate gains

1. Corporate Bonds 13%

2. Government Bonds 10%

Equity: your money is more volatile but with the greatest potential for growth

1. Canadian Equity 15%

2. U.S. Equity 39%

3. International Equity 15%

4. Emerging Market Equity 7%

5. Equity Growth Portfolio

The Equity Growth Portfolio’s objective is to maximize returns over the long term by investing primarily in exchange-traded funds (ETFs) that invest in Canadian and foreign equity securities. Since the need for income (interest, dividends and capital gains) is low, the Portfolio’s exposure to ETFs that invest in income-producing investments such as Canadian and foreign fixed income will be minimal.

Target Asset Allocation

Equities 90%

Fixed Income 10%

Actual Asset Allocation

Fixed income: your money is more stable but with low to moderate gains

1. Corporate Bonds 0%

2. Government Bonds 2%

Equity: your money is more volatile but with the greatest potential for growth

1. Canadian Equity 21%

2. U.S. Equity 47%

3. International Equity 20%

4. Emerging Market Equity 10%

What Is The Fee At BMO SmartFolio?

Till now, we have seen what the SmartFolio Is, What It does and The Different Types of Portfolios. Now, that we have a good understanding of what SmartFolio is, let’s now look at the fees associated.

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First of all, SmartFolio account fees are calculated as a percentage based on how much money you’ve invested.

An account fee covers professional portfolio management (experts monitoring and rebalancing your investments!) and support from a team of investment advisors should you have any questions or need any help.

A look at the fee schedule

Here’s what you can expect the fees to be based on the amount you have Invested.

Asset value             Annual Rate

First $100,000             0.70%
Next $150,000            0.60%
Next $250,000            0.50%
Above $500,000         0.40%

For Example, if David invests $250,000, his total yearly fee would be $1,600.

Here’s the breakdown of how he’s charged:

1. First $100,000 at 0.7% = $700

2. Next $150,000 at 0.6% = $900

SmartFolio accounts are made up of ETF portfolios, and all ETFs have management fees and expenses that are calculated as Management Expense Ratio (MER) in addition to the advisory fee.

Also, the MER fees are included within the pricing of the ETFs themselves and will not appear as an expense item on your account statement. The MER of the ETFs held within your portfolio will likely be a weighted average of 0.20% to 0.35% of the value of your SmartFolio account.

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What Are The Transaction Fees At BMO SmartFolio?

Below is the list of the transaction fees charged by SmartFolio for services listed:

1. Transfer-out of a Non-Registered or Registered Account (Full or partial withdrawal) – $135 per account

2. Partial withdrawal of a Registered Account – (excluding TFSA or RRIF accounts) – $25 per request

3. Full De-registration of a Registered Account (excluding TFSA and RRIF accounts) $100 per account

4. Cheque requests $10 per request

5. Paper statement requests: $5 per statement

How To Open A BMO SmartFolio Account?

So you are convinced to open a BMO SmartFolio Account? Great choice I must say.

To Open A BMO SmartFolio account online, you will have to complete a series of questions to help them identify your investment objectives.

If you have any questions or concerns you can call their investment professionals at 1-844-895-3721, email them at [email protected] or open a chat instantly on the site www.bmo.com/smartfolio.

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What Account Types Are Available Under SmartFolio? (Complete List)

BMO SmartFolio currently provides the following types of accounts: (Complete List)

1. Investment Accounts

2. Joint Investment Accounts

3. Registered Retirement Income Fund (RRIF)

4. Registered Retirement Savings Plans (RRSP)

5. Registered Education Savings Plans (RESP)

6. Spousal Registered Retirement Income Fund (RRIF)

7. Spousal Registered Retirement Savings Plans (RRSP)

8. Tax-Free Savings Account (TFSA)

Future account types will also include:

1. Locked-in Retirement Accounts (LIRA)

2. Corporate/Non-Personal

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What Is The Minimum SmartFolio Account Size?

The minimum account size per BMO SmartFolio account is $1000.

What options do I have to fund my account?

SmartFolio will accept the following four funding methods:

1. Cheque made payable to BMO Nesbitt Burns with your SmartFolio account number noted on the cheque.

2. As A Bill Payment from a BMO Bank account (CAD only) – Expect transfer time of 1-2 business days

3. Bill Payment from a non-BMO Canadian financial institution – Expect transfer time of 3-5 business days

4. Also, In cash transfer from another investment account

How Can I Make Monthly SmartFolio Contributions?

Yes, you can easily set up pre-authorized contributions from your BMO Bank account within the BMO SmartFolio platform.

Alternatively, you can also fill out a Pre-Authorized Contribution form and set up a weekly, bi-monthly or monthly contribution from any Canadian Financial Institution.

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Who Will Manage My SmartFolio Portfolio?

Your assets will be held in a brokerage account in your name with BMO Nesbitt Burns – a member of BMO Financial Group.

With that said, BMO Nesbitt Burns is a member of the Investment Industry Regulatory Organization of Canada (IIROC) & the Canada Investor Protection Fund (CIPF). BMO Financial Group was established in 1817 and serves more than 12 million personal, commercial, corporate and institutional customers in North America and internationally.

How Often Will SmartFolio Rebalance My Portfolio?

Your portfolio is monitored on a daily basis by BMO’s expert portfolio managers, to ensure that it is still within its target allocations.

If the Model Portfolio’s investments will go 10 percent below or above the median weight percentages indicated, the Model Portfolio’s positions and your SmartFolio Account will be rebalanced to percentages that fall within the range.

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How Can I Track My BMO SmartFolio Investment Performance?

As a client of BMO SmartFolio, you will have a secure User ID with which you will be able to log into your account and see your performance.

Also, you will be able to track the performance of each SmartFolio account which will be shown as an increase or decrease in value in dollars, as a percentage of dollars invested and as well on a chart showing the growth in the portfolio over time.

You will also be provided with online statements that you can use to review your account balances month to month as well as any transactions which occurred in that period.

How Will SmartFolio Protect My Assets?

Your assets will be held in an account in your own name within BMO Nesbitt Burns. They will also not be used as collateral for loans.

In addition, you will also benefit from the Canada Investor Protection Fund (CIPF) which will ensure clients up to $1 Million CAD in the event that BMO Nesbitt Burns becomes insolvent.

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Conclusion

BMO SmartFolio is a great investment platform especially if you are new to the investment world and ETF’s. Also, you get help from professionals who know the financial world and invest your money in the right portfolios. All this for a minimal fee.

Also, comparing the SmartFolio fees with the rest of the market products, I do find it to be reasonably priced especially considering all the features and benefits it offers.

With that said, almost every account type is offered here, including tax accounts such as TFSA, RRSP and RESP. And, don’t forget the portfolio types – 5 types offered here. It pretty much covers every risk tolerance (based on your age and income levels) and investment goals you may have. For example, buying a home in the next 2 years, choose the right balance in the portfolio.

Pros out-weigh the cons and also you have excellent support available 24/7 for any concerns or technical glitch. BMO is a trusted brand in the financial world, so rest assured your hard-earned money and investments.

Please share, comments and let me know your thoughts!

Top 10 Latest & Popular Posts

BMO SmartFolio Review

4.95

Value For Money

5.0/5

Benefits

5.0/5

Rewards

5.0/5

Pros

  • Low Investment Fees
  • 5 Types Of ETF Portfolios
  • All all account types covered

Cons

  • Lots of competition in the market for Investment Platforms
  • Not fully automated platform
  • No options for options trading

Sagar Sridhar

Sagar Sridhar Is a Personal Finance Blogger from Toronto, Canada. He is a Computer Science Engineer by profession and works in IT Industry. What started as a hobby, quickly turned into serious blogging and income. In this blog, Sagar passionately writes articles about Personal Finance, DIY Investing, Retirement, Stocks & ETFs, Frugal Living and much more. Do visit about page to know more about him. If you would like to get in touch, you can do so by emailing him at [email protected] and he'll get back to you at the earliest.

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