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Bank of Montreal’s (TSX:BMO) ETF Menu: A Feast for Passive and Active Investors

If the exchange-traded fund was a foodstuff and you want a variety of them, you’d go to the place that serves more than a hundred of them. Bank of Montreal’s (TSX:BMO)(NYSE:BMO) ETF menu is mouth-watering. Active as well as passive investors can delight in products that align with their respective financial objectives.

Bank of Montreal has also made it easier for investors, especially first-time ETF investors, to pick the suitable product. The choices on the menu capture all types of risk appetite and income preferences. No bank can be as obliging.

The battle for ETF supremacy  

The ETF is evolving from merely an alternative investment for passive investors. Many are gravitating toward ETFs because investing in this innovative product is already an investment strategy – that of diversification.

Bank of Montreal has the mettle, but not the monopoly of the ETF business Royal Bank of Canada (TSX:RY)(NYSE:RY) is a prominent fixture too. The battle for ETF supremacy is on, but dislodging BMO from its leadership position is a tall order.

The 18% contribution of BMO Asset Management, the bank’s wealth management division, to the total net income in 2017 is a testament to BMO’s mettle. Also, it points to the investing public’s growing acceptance of ETFs. The ETF market in Canada is still in expansion mode and growth could even double in the very near future.

BMO’s stock performance

BMO’s stock performance for the last three months could be described as fairly good. Despite the “noise” that’s terrorizing global stock exchanges, the bank’s stock has shown resiliency. For the whole of September until mid-October, the price lingered above $80.00 and the highest close was at $83.66 on September 24.

The price eroded gradually from then on leading to lowest closing price of $73.48. on November 23. That’s a 12.16% decline from the recent high. But the picture isn’t gloomy as the price drops seem to suggest: there’s more here than meets the eye.

The tailwind will blow soon

The year is almost over and investors should anticipate the tailwind to blow fairly soon. If Bank of Montreal was able to weather the financial crisis in 2008, there’s absolutely no reason why this dividend aristocrat can’t overcome this one.

Observe closely and you’ll notice that BMO is gathering steam. The Canadian bank is in good shape compared to industry peers. Management has been making all the right moves on the domestic front and in neighbouring America.

Expect the wealth management division to be at the forefront when the ETF business magnifies. Bank of Montreal will prove it deserves to be named as the ruler of ETFs. Management is currently strengthening the bank’s fintech capabilities. Perhaps the goal is also to be a pillar of wealth management technology.

Clearly, things are looking up. Hefty gains and consistent dividend payouts await loyal investors. You could also seize the moment and ride on the momentum. Come hell or high water, Bank of Montreal will survive and deliver what is expected. So why let this buying opportunity pass?


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Fool contributor Christopher Liew has no position in any of the stocks mentioned.

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