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  • ETF Knowledge
  • Fund Knowledge
What are ETFs?
  • An open-ended fund that is listed and traded on a stock exchange, which can be bought or sold directly during trading hours, much like a stock.
  • A basket of securities which may consist of stocks, bonds, or other assets such as commodities.
  • The asset mix of an ETF generally aims to track the performance of an index or provide exposure to an asset class.
  • ETFs offer many benefits to investors, including diversification, liquidity, low fees, flexibility, transparency and tax efficiency.
Learn more about ETFs

Fund Investing Basics:

A fund is a pool of investments managed by a professional portfolio manager. The portfolio manager invests the money on behalf of a group of investors who have similar investment goals. The fund’s goals are outlined in the fund objectives and how the portfolio manager invests the money to meet the fund’s objective are outlined in the fund’s strategies.

Depending on the investment objective, a fund can invest in stocks, bonds, cash, or other funds or exchange traded funds.

Funds provide many benefits, including professional money management and diversification with broad investment options across sectors, asset classes and geographies. They are easy to invest and are also available with low minimum initial investment amounts.

The best approach to achieve your specific investment goals is to build a financial plan. Depending on your personal investment knowledge, it may be a good idea to seek advice from an investment professional. An investment professional will help you to build your personalized, tailored plan and monitor it with you on an on-going basis. Some of the things you will need to think about are what you are saving for, how long you plan to stay invested and your risk tolerance.

In selecting the funds that best meet your individual needs, you will need to consider the trade-off between risk and returns.

The value of a fund can go up or down. The underlying investments in a fund are affected by factors like changes in interest rates, economic conditions around the world or news about companies the fund invests in. How big the fund’s value changes is a measure of risk. This is called volatility.

Investments that have the highest return potential fluctuate more with the market in the short term and may have a greater possibility of gaining value over the long term.

Diversification is an important investment strategy to help reduce volatility and manage risk.

Funds have associated fees and expenses. For example, BMO Funds charge management fees, trustee fees and other expenses, which are stated in the Product Key Facts Statement and Prospectus of each fund. You may also be required to pay subscription fees to your bank or financial advisor.

How do investors make money from a fund?

Investors in a fund can make money from:

  • Income distributions – a fund can earn income such as interest and dividends, and from time to time, and depends on the fund’s distribution policy, distribute that income to investors.
  • Capital growth – the value of an investment in a fund will rise when the value of the fund’s investments rises.