BMO Global Asset Management White Paper: Finding Income in a Low-Yield Environment Organization Releases White Paper; Launches Microsite to Help Investors Generate More Investment Income in Low Interest Rate Environments

2013-03-05 16:14:11 -

CHICAGO, IL -- (Marketwire) -- 03/05/13 -- BMO Global Asset Management recently released its latest white paper, Liquidity Tiering for High Yields in the Tax-Free Market : . The white paper addresses the wide-spread problem that many investors currently face in trying to find income in a low-yield environment and identifies solutions that use proven, yet rarely discussed methods.

The report notes that, as the Federal Reserve Board keeps short-term rates unusually low with no change in sight, investors are searching for creative ways to balance their income and liquidity goals. At the moment, many are choosing low-yielding U.S. Treasurys, money market funds and bank deposits. According to BMO Global Asset Management, the wiser and more flexible solution would be to tier fixed income investments according to liquidity.

"Despite continued market volatility, it's inherently risky to limit a portfolio to cash, money market funds and U.S. Treasurys because investors lock in yields that are too low to meet their financial goals," said Duane McAllister, Tax-Exempt Portfolio Manager, BMO Global Asset Management. "With a diversified portfolio allocated according to liquidity needs, investors can achieve an optimal balance between stability and yield, regardless of market conditions."

The white paper also highlights that, in today's record low interest rate environment, the so-called "risk-free" yield associated with U.S. Treasurys is anything but safe. "In fact, these historically low interest rates will certainly result in negative returns on an inflation-adjusted basis," according to McAllister. "Those investments will fail to keep pace with inflation. And in real terms, investors will lose money."

To prevent such losses, the white paper supports liquidity tiering -- a method of enhancing money market returns with income from short- and intermediate-term fixed income investments without adding risk. This approach divides cash and other fixed income assets into four distinct tiers: Operating Cash, Core Reserve Cash, Short-Term Assets and Strategic Assets. In turn, the assets in each tier can be invested the appropriate strategy. By design, this methodology can also provide tax-advantaged income.

BMO Global Asset Management offers a range of solutions that can provide investors with the advantages of liquidity tiering. These include:

  • Operating Cash solutions - BMO Tax-Free Money Market Fund provides daily liquidity to meet current needs.

  • Core Reserve Cash solutions - BMO Ultra Short Tax-Free Fund uses a slightly longer duration to enhance yield. It focuses on high-quality municipal issues so that current income provided is largely exempt from federal income tax.

  • Short-Term Asset solutions - BMO Short Tax-Free Fund focuses on intermediate-term investment grade bonds and notes to maximize total return consistent with current income.

  • Strategic Asset solutions - BMO Intermediate Tax-Free Fund provides a high level of current income free from federal income taxes. It focuses on high-quality municipal bonds to preserve capital.

The white paper advises investors considering liquidity tiering to work closely with an experienced financial professional who has access to cash management expertise. It also urges choosing actively managed solutions that can boost their portfolios' effectiveness and safeguard against market volatility.

BMO Global Asset Management Launches Microsite
BMO Global Asset Management also announced that it has launched a microsite, : , containing a number of useful resources for investors as they seek ways to generate more investment income in a low-yield rate environment.

To access the full white paper report, visit : .

About BMO Global Asset Management
BMO Global Asset Management is a global investment manager with more than $110 billion in assets under management as of October 31, 2012, including the BMO family of mutual funds.

Our multi-disciplined teams are based in Toronto, Chicago and Milwaukee, and our network of world-class boutique managers is strategically located across the globe. They include Monegy, Inc., Pyrford International Ltd., Lloyd George Management and Taplin, Canida & Habacht, LLC. BMO Global Asset Management delivers service excellence from offices throughout North America, and in London, Abu Dhabi, Mumbai, Beijing, Shanghai, and Hong Kong. Our approach has led us to be recognized by Pension & Investments as one of the world's largest 100 asset managers based on combined assets under management as of December 31, 2011.

We are a part of BMO Financial Group (NYSE: BMO), a fully diversified financial services organization with $525 billion total assets and more than 46,000 employees as of October 31, 2012.

This is not intended to serve as a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect our judgment at this date and are subject to change. Information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy. This publication is prepared for general information only. This material does not constitute investment advice and is not intended as an endorsement of any specific investment. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investment involves risk. Market conditions and trends will fluctuate. The value of an investment as well as income associated with investments may rise or fall. Accordingly, investors may receive back less than originally invested. Investments cannot be made in an index. Past performance is not necessarily a guide to future performance.

BMO Global Asset Management is the brand name for various affiliated entities of BMO Financial Group that provide trust, custody, securities lending, investment management, and retirement plan services. Certain of the products and services offered under the brand name BMO Global Asset Management are designed specifically for various categories of investors in a number of different countries and regions. Products and services are only offered to such investors in those countries and regions in accordance with applicable laws and regulations. BMO Financial Group (NYSE: BMO), is a service mark of Bank of Montreal (BMO).

Investors should consider the Fund's investment objectives, risks, charges and expenses carefully before investing. For a prospectus and/or summary prospectus, which contains this and other information about the BMO Funds, call 1-800-580-3863. Please read it carefully before investing.

An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds.

Interest income from the Fund's investments may be subject to the federal alternative minimum tax (AMT) for individuals and corporations, and state and local taxes.

All investments involve risk, including the possible loss of principal.

BMO Asset Management Corp. is the investment adviser to the BMO Funds. M&I Distributors LLC is the distributor. BMO Funds are not marketed or sold outside of the United States.

Investment products are: Not FDIC Insured | No Bank Guarantee | May Lose Value

©2013 BMO Financial Corp.

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