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Podcast Transcript: Canadian Mortgage-backed Securities (MBS) – Yield Premiums with Downside Protection

Podcast Transcript: Canadian Mortgage-backed Securities (MBS) – Yield Premiums with Downside Protection

This podcast was published on June 23, 2021

Matt Montemurro: If you look historically from a return and risk-return perspective, MBS outperformed federal bonds, agency bonds and provincial bonds. They have higher average returns with less risk. And I think that’s exactly what you want from that defensive income in your portfolio.

Announcer: You are listening to Deep Dive, a special edition of the BMO ETFs podcast. If you’re looking for timely trade ideas to navigate the current market, we encourage you to tune in each Thursday for our weekly Views from the Desk episodes. You’ll hear razor sharp insights, commentary and ETF strategies from our portfolio managers, as well as questions submitted directly from our audience of Canadian financial advisors.

In today's episode, our host Rob Butler speaks with director and portfolio manager of ETFs, Matt Montemurro, about the advantages of investing in the $500 billion Canadian MBS market and the significant structural differences from his U.S. counterpart. You’ll hear how BMO Canadian MBS index ETF ticker ZMBS has democratized the asset class for investors providing direct access to a strategy previously only available to institutions that offer stability and bolsters portfolio yield.

Before we hear from our experts, please remember to subscribe to this podcast and bookmark BMOETFs.ca in your browser.

Rob Butler: Thanks very much for joining us today. My name is Rob Butler. I work on the ETF side of our business at BMO Global Asset Management. Today we’re going to be joined by Matt Montemurro who is the director and portfolio manager on the fixed income side of our ETF trading desk. Matt’s been with us for just shy of 10 years I believe, so a ton of experience in the fixed income segment of the market.

And with that, we’re going to spend the entire session on the ticker ZMBS, which is the mortgage-backed security space in Canada. So thanks for joining us today, Matt.

Matt Montemurro: Thanks for having me, Rob. I'm looking forward to talk about ZMBS.

Rob Butler: Well, I think in the retail space and with our advisor base, this is a segment of the market that they’re maybe not as readily familiar with. So I think for that reason, it’s just good to go a little bit deeper on what this part of the market looks like and some of the advantages to investing in it. So, let’s just kick it off. I mean looking at the mortgage-backed security space, what does it look like in Canada? And how does it behave?

Matt Montemurro: Sure. You know why don’t we start with what a mortgage-backed security is? So, you know it’s a fixed-rate investment that represents an ownership interest in a pool of mortgages that have all been packaged together. And as an investor, you’ll receive a proportional share of both interest and principal payments of this pool of mortgages.

ZMBS specifically invests in Canadian National Housing Act mortgage-backed securities. So, you know that’s a mouthful right there, but those are known as NHA 975 pools, which are basically five-year fixed mortgages that have been fully ensured by the CMHC. That’s a key distinction of the mortgage-backed pools here, and we’ll discuss that a little bit later.

The market in Canada is over 500 billion in size. ZMBS focuses on the most liquid pools that are available. And as you mentioned, Rob, you know mortgage-backed securities traditionally have been an institutional vehicle. They tended to be traded by large institutions and they’ve been held on bank balance sheets. So, ZMBS is the first ETF in Canada that provides the average investor direct access to this asset class, which has significant benefits from a portfolio constructive perspective as well as some yield benefits, which in this current low-yield environment is always a plus.

Rob Butler: So is it appropriate then, with the fact that they typically trade this type of product on the institutional side, with regards to portfolio managers and more retail-oriented businesses, what would be the most similar proxy for segment of fixed-income market that we’d be more familiar with that we might put in the same bucket?

Matt Montemurro: So, because these mortgages are all CMHC insured mortgages, these pools are 100% explicitly guaranteed by the Federal Government of Canada. There’s no limit to that guarantee either. So, these securities are triple-A rated, making them very, very similar to the exposure you’d get from a Federal Government of Canada bond.

So triple-A rating, fully 100% explicit guarantee. So you get that same protection and credit profile that you would from your federal bond exposure, but you get an additional 30 to 40 basis points of yield pick up. So, you know, in that current low-yield environment, that yield pick up is quite significant. And it’s a perfect way to provide defensive income to your portfolio.

You know if you’re looking historically and looking at a return perspective, short federal bonds have a correlation of 0.97 to manages, MBS 975 pools. So you know you’re almost at a one-to-one correlation, and that’s looking over five years worth of returns.

And if you look historically from a return and a risk-return perspective, MBS outperformed federal bonds, agency bonds and provincial bonds on a risk-return basis. You know they have higher average returns with less risk. And I think that’s exactly what you want from the defensive allocation and that defensive income in your portfolio; higher returns, less risk. So, you know, when you’re looking at trying to compare it, I think federal government bonds are the best way to look. But you know that yield premium is quite attractive, especially in the current market.

Rob Butler: Matt, the premium that you’re earning in terms of coupon or overall yield, is that a consistent ratio? Or how much does it really move around based on market sentiment and what the market’s doing?

Matt Montemurro: It is a function of market sentiment and how it moves around, but historically we’ve seen it’s been pretty stable. You know we said 30 to 40 basis points, I think we saw it tighten a little bit last year to about 28 is the low, but it’s gone up to as high as about 42, 43. So, you know I think that 30 to 40 basis point yield premium is pretty static, and that’s what we’ve seen over the last five to seven years as you look back.

Rob Butler: No, and I think that’s what clients need to see in the statement. It gives them a better idea of what the expectation might look like relative to some of the other tools or investments that they have access to. And then, I mean we have to talk about it; when I bring up the concept of mortgage-backed securities, no question, ’08, ’07 in the U.S. comes not mind in many people’s thought process and their analysis. So, how do we distinguish between the two markets? Because I have to admit, this is probably the most important part of this conversation.

Matt Montemurro: So, the key difference here is that the mortgages in ZMBS or these NHA 975 mortgages, are all CMHC backed and have 100% explicit guarantee by the Canadian government. That guarantee just simply doesn’t exist for the U.S. mortgage or the U.S. mortgage-backed security market.

Additionally, you know mortgage regulations are fundamentally different between Canada and the U.S. And you know, I think this was exemplified by the mass default that we saw in the U.S. in 2007/2008. So just from a way of perspective, in 2007/2008, 5% of all U.S. mortgages defaulted and 20% of all deregulated subprime loans defaulted. Where, if you look in Canada, that was 0.45%. So, we’re talking magnitudes difference in defaults during 2007/2008, and that’s basically because of the structural differences in the market. So, although the terminology of mortgage-backed securities is similar, the investment itself and its riskiness is actually very fundamentally different.

You know, as well, if you even look at the mortgage market as a whole, you know differences in mortgage terms – prepayment availability, tax deductibility, insurance requirements – make for it to be a very different investment environment in the U.S. versus Canada. U.S., this makes it much more speculative market, where in Canada you have much more stability. And in Canada, MBS's trade much more like a federal bond than a risk-on asset that you’d see on the speculative side in the U.S.

So, you know, although the terminology is similar, the differences can't be greater. And I think that’s what we – we saw that play out in 2007/2008, and again we’re seeing it in the current market with the stability of returns and the stability of risk reward that you see in the Canadian ZMBS or MBS market.

Announcer: You are listening to Deep Dive, a special edition of the BMO ETFs podcast. If you’re looking for timely trade ideas to navigate the current market, we encourage you to tune in each Thursday for our weekly Views from the Desk episodes. You’ll hear razor sharp insights, commentary and ETF strategies from our portfolio managers, as well as questions submitted directly from our audience of Canadian financial advisors.

Rob Butler: You kind of hinted upon this earlier but with regard to the retail segment of the market and the advisor base, where mortgage-backed investments were probably a little less familiar or accessible, who was or who has been trading the bulk of those types of strategies up until now?

Matt Montemurro: So, this market is basically nonexistent to retail investors, which makes ZMBS so attractive and compelling because you’re really getting access to a market that previously was, you know there was gatekeepers there and that was the institution’s, bank treasuries. And most of the trading that we still currently see is done by bank treasuries who hold these pools on their balance sheets.

You know it’s not an aberration to see a bank treasury take an entire $500 million issue and just buy the entire thing in the primary market. You know that’s something that you don’t see in a traditional bond market. So, it’s very difficult for a retail investor to be able to get exposure to this market. You know average trade size is $25 million to $50 million blocks, and it’s not rare to see several hundred-million-dollar pieces of MGS exchange on a daily basis.

So, what that does though is it creates illiquidity in the market and makes liquidity very scarce once that deal is in secondary. Because these bank treasuries, they buy it for that yield pick up, they buy it for that stable income stream, and they just leave it on their balance sheets. It’s very attractive from a capital perspective on their balance sheet.

So, you know one thing that this ETF truly does is it democratizes the ability of retail investors to attain an asset class and the very attractive accompanying yield pick up that was previously unavailable and only available to institutional investors. And that’s why I think ZMBS has had quite a bit of success since its launch. And it is such an attractive piece for investors looking to add that additional yield in what we’re looking at as a historically low-rate environment.

Rob Butler: Well, that sounds good, Matt. And then, I mean one thing we could run clients through is what actually happens if one of the mortgage contracts goes into default? What might they expect? And what’s kind of the process of the trading side and structuring side to deal with that?

Matt Montemurro: It’s actually quite simple. There is no impact. There’s no impact to the holder of the MBS if there is a default on one of those mortgages. So, you know, how is that possible? What is the mechanism that works? So, NHA MBS are fully insured by the CMHC, both in principal and interest, and there’s no limit to the amount of coverage.

So, if a mortgage borrower does default, the issuer of that mortgage will make the payment to the MBS pool, and then they’ll claim that insurance through the CMHC. So, from a holder of the MBS, there is zero impact or disruption from that default. They don’t even know that that default has happened.

So that makes the structure very, very stable. And I think that’s the stability there. Because the issuer of the mortgage has that backstop in the CMHC and ultimately the federal government, that brings stability and that brings the insurance that you’d need to feel comfortable, that if there is an increase in default rates, you as a holder of ZMBS are not going to be adversely affected.

Rob Butler: And then for a client that might be considering the mortgage-backed space, or maybe this is the first time they’re learning about it, where do you see this fitting in a client portfolio? The obvious one being from an asset allocation perspective, you’re going to find it on the fixed-income side of your statement, but what might it replace or complement on the fixed-income sleeve, in your opinion?

Matt Montemurro: Yeah, so you know I think ZMBS is a perfect complement to your core fixed-income allocation, for any investor who’s looking for defensive income with little to no credit risk. You know with its duration of about two years, you know I think it’s very well positioned for the current market. Given that we’re experiencing a steepening yield curve and the threat of rising rates, the ability to reduce that exposure to interest rates, so reduce that overall duration while still maximizing your yield is very, very attractive, and I think it fits very, very well in the current market.

You know I do think that 30/40 basis point yield enhancement does help meet a lot of income needs while not reducing your overall credit quality. So we have a lot of investors who may be concerned about corporate debt, how a corporate spread is going to move over the next year as the economy reopens. You know we’re going to be in for a lot of volatility as we expect this recovery not to be a straight line but to ebb and flow. ZMBS might be a perfect way to provide stability in your portfolio without giving up all the yield you may need from an income perspective.

So, for anyone who’s concerned about credit and who has an allocation to federal government or provincial government bonds, who also may be considering reducing that duration exposure from their core, ZMBS is an excellent way to enhance your yield while keeping yourself protected. And I think it’s a great way for you to not have to give up everything.

And I think that’s one of the challenges in fixed income, where you may look at the market and say, you know what, I am concerned about corporate bonds or credit. I am concerned about the province’s ability to raise debt. Well, you know if you want to take that risk off the table, it usually costs. And the cost comes in the way of yield and therefore you don’t meet your income needs. Whereas ZMBS is a perfect complement to that and a perfect solution for that, because it does provide that yield pick up but still protects you on the downside from a risk perspective.

Rob Butler: Matt, thanks for your talking points today. I think if you’re looking to learn more about the mortgage-backed security space and this particular ETF, ZMBS, do reach out to your ETF specialist. And if you needed to tap one of the traders or structures to also go a little bit deeper in how to trade this product effectively, we would be willing to help you to do that too.

So, from me, Rob Butler, and BMO Global Asset Management, thanks very much for your time today, Matt.

Matt Montemurro: Thanks for having me, Rob. And yes, I think it’s a unique opportunity with ZMBS and I hope everyone got a nice lesson into the mortgage-backed security market.

Rob Butler: Great, thanks Matt.

Announcer: BMO Global Asset Management is a brand name that comprises BMO Asset Management Inc., BMO Investments Inc., BMO Asset Management Corp., BMO Asset Management Limited, and BMO Specialized Investment Management firms.

The viewpoints expressed by the investment manager represent their assessment of the markets at the time of publication. Those views are subject to change without notice at any time without any kind of notice. The information contained herein is not and should not be construed as investment, tax or legal advice to any party. Investments should be evaluated relative to the individual’s investment objectives and professional advice should be obtained with respect to any circumstance.

Any statement that necessarily depends on future events may be a forward-looking statement. Forward-looking statements are not guarantees of performance.

Thank you to Rob Butler and Matt Montemurro for those valuable insights. See you next time.


Podcast Transcript: Canadian Mortgage-backed Securities (MBS) – Yield Premiums with Downside Protection

This podcast was published on June 23, 2021

Matt Montemurro: If you look historically from a return and risk-return perspective, MBS outperformed federal bonds, agency bonds and provincial bonds. They have higher average returns with less risk. And I think that’s exactly what you want from that defensive income in your portfolio.

Announcer: You are listening to Deep Dive, a special edition of the BMO ETFs podcast. If you’re looking for timely trade ideas to navigate the current market, we encourage you to tune in each Thursday for our weekly Views from the Desk episodes. You’ll hear razor sharp insights, commentary and ETF strategies from our portfolio managers, as well as questions submitted directly from our audience of Canadian financial advisors.

In today's episode, our host Rob Butler speaks with director and portfolio manager of ETFs, Matt Montemurro, about the advantages of investing in the $500 billion Canadian MBS market and the significant structural differences from his U.S. counterpart. You’ll hear how BMO Canadian MBS index ETF ticker ZMBS has democratized the asset class for investors providing direct access to a strategy previously only available to institutions that offer stability and bolsters portfolio yield.

Before we hear from our experts, please remember to subscribe to this podcast and bookmark BMOETFs.ca in your browser.

Rob Butler: Thanks very much for joining us today. My name is Rob Butler. I work on the ETF side of our business at BMO Global Asset Management. Today we’re going to be joined by Matt Montemurro who is the director and portfolio manager on the fixed income side of our ETF trading desk. Matt’s been with us for just shy of 10 years I believe, so a ton of experience in the fixed income segment of the market.

And with that, we’re going to spend the entire session on the ticker ZMBS, which is the mortgage-backed security space in Canada. So thanks for joining us today, Matt.

Matt Montemurro: Thanks for having me, Rob. I'm looking forward to talk about ZMBS.

Rob Butler: Well, I think in the retail space and with our advisor base, this is a segment of the market that they’re maybe not as readily familiar with. So I think for that reason, it’s just good to go a little bit deeper on what this part of the market looks like and some of the advantages to investing in it. So, let’s just kick it off. I mean looking at the mortgage-backed security space, what does it look like in Canada? And how does it behave?

Matt Montemurro: Sure. You know why don’t we start with what a mortgage-backed security is? So, you know it’s a fixed-rate investment that represents an ownership interest in a pool of mortgages that have all been packaged together. And as an investor, you’ll receive a proportional share of both interest and principal payments of this pool of mortgages.

ZMBS specifically invests in Canadian National Housing Act mortgage-backed securities. So, you know that’s a mouthful right there, but those are known as NHA 975 pools, which are basically five-year fixed mortgages that have been fully ensured by the CMHC. That’s a key distinction of the mortgage-backed pools here, and we’ll discuss that a little bit later.

The market in Canada is over 500 billion in size. ZMBS focuses on the most liquid pools that are available. And as you mentioned, Rob, you know mortgage-backed securities traditionally have been an institutional vehicle. They tended to be traded by large institutions and they’ve been held on bank balance sheets. So, ZMBS is the first ETF in Canada that provides the average investor direct access to this asset class, which has significant benefits from a portfolio constructive perspective as well as some yield benefits, which in this current low-yield environment is always a plus.

Rob Butler: So is it appropriate then, with the fact that they typically trade this type of product on the institutional side, with regards to portfolio managers and more retail-oriented businesses, what would be the most similar proxy for segment of fixed-income market that we’d be more familiar with that we might put in the same bucket?

Matt Montemurro: So, because these mortgages are all CMHC insured mortgages, these pools are 100% explicitly guaranteed by the Federal Government of Canada. There’s no limit to that guarantee either. So, these securities are triple-A rated, making them very, very similar to the exposure you’d get from a Federal Government of Canada bond.

So triple-A rating, fully 100% explicit guarantee. So you get that same protection and credit profile that you would from your federal bond exposure, but you get an additional 30 to 40 basis points of yield pick up. So, you know, in that current low-yield environment, that yield pick up is quite significant. And it’s a perfect way to provide defensive income to your portfolio.

You know if you’re looking historically and looking at a return perspective, short federal bonds have a correlation of 0.97 to manages, MBS 975 pools. So you know you’re almost at a one-to-one correlation, and that’s looking over five years worth of returns.

And if you look historically from a return and a risk-return perspective, MBS outperformed federal bonds, agency bonds and provincial bonds on a risk-return basis. You know they have higher average returns with less risk. And I think that’s exactly what you want from the defensive allocation and that defensive income in your portfolio; higher returns, less risk. So, you know, when you’re looking at trying to compare it, I think federal government bonds are the best way to look. But you know that yield premium is quite attractive, especially in the current market.

Rob Butler: Matt, the premium that you’re earning in terms of coupon or overall yield, is that a consistent ratio? Or how much does it really move around based on market sentiment and what the market’s doing?

Matt Montemurro: It is a function of market sentiment and how it moves around, but historically we’ve seen it’s been pretty stable. You know we said 30 to 40 basis points, I think we saw it tighten a little bit last year to about 28 is the low, but it’s gone up to as high as about 42, 43. So, you know I think that 30 to 40 basis point yield premium is pretty static, and that’s what we’ve seen over the last five to seven years as you look back.

Rob Butler: No, and I think that’s what clients need to see in the statement. It gives them a better idea of what the expectation might look like relative to some of the other tools or investments that they have access to. And then, I mean we have to talk about it; when I bring up the concept of mortgage-backed securities, no question, ’08, ’07 in the U.S. comes not mind in many people’s thought process and their analysis. So, how do we distinguish between the two markets? Because I have to admit, this is probably the most important part of this conversation.

Matt Montemurro: So, the key difference here is that the mortgages in ZMBS or these NHA 975 mortgages, are all CMHC backed and have 100% explicit guarantee by the Canadian government. That guarantee just simply doesn’t exist for the U.S. mortgage or the U.S. mortgage-backed security market.

Additionally, you know mortgage regulations are fundamentally different between Canada and the U.S. And you know, I think this was exemplified by the mass default that we saw in the U.S. in 2007/2008. So just from a way of perspective, in 2007/2008, 5% of all U.S. mortgages defaulted and 20% of all deregulated subprime loans defaulted. Where, if you look in Canada, that was 0.45%. So, we’re talking magnitudes difference in defaults during 2007/2008, and that’s basically because of the structural differences in the market. So, although the terminology of mortgage-backed securities is similar, the investment itself and its riskiness is actually very fundamentally different.

You know, as well, if you even look at the mortgage market as a whole, you know differences in mortgage terms – prepayment availability, tax deductibility, insurance requirements – make for it to be a very different investment environment in the U.S. versus Canada. U.S., this makes it much more speculative market, where in Canada you have much more stability. And in Canada, MBS's trade much more like a federal bond than a risk-on asset that you’d see on the speculative side in the U.S.

So, you know, although the terminology is similar, the differences can't be greater. And I think that’s what we – we saw that play out in 2007/2008, and again we’re seeing it in the current market with the stability of returns and the stability of risk reward that you see in the Canadian ZMBS or MBS market.

Announcer: You are listening to Deep Dive, a special edition of the BMO ETFs podcast. If you’re looking for timely trade ideas to navigate the current market, we encourage you to tune in each Thursday for our weekly Views from the Desk episodes. You’ll hear razor sharp insights, commentary and ETF strategies from our portfolio managers, as well as questions submitted directly from our audience of Canadian financial advisors.

Rob Butler: You kind of hinted upon this earlier but with regard to the retail segment of the market and the advisor base, where mortgage-backed investments were probably a little less familiar or accessible, who was or who has been trading the bulk of those types of strategies up until now?

Matt Montemurro: So, this market is basically nonexistent to retail investors, which makes ZMBS so attractive and compelling because you’re really getting access to a market that previously was, you know there was gatekeepers there and that was the institution’s, bank treasuries. And most of the trading that we still currently see is done by bank treasuries who hold these pools on their balance sheets.

You know it’s not an aberration to see a bank treasury take an entire $500 million issue and just buy the entire thing in the primary market. You know that’s something that you don’t see in a traditional bond market. So, it’s very difficult for a retail investor to be able to get exposure to this market. You know average trade size is $25 million to $50 million blocks, and it’s not rare to see several hundred-million-dollar pieces of MGS exchange on a daily basis.

So, what that does though is it creates illiquidity in the market and makes liquidity very scarce once that deal is in secondary. Because these bank treasuries, they buy it for that yield pick up, they buy it for that stable income stream, and they just leave it on their balance sheets. It’s very attractive from a capital perspective on their balance sheet.

So, you know one thing that this ETF truly does is it democratizes the ability of retail investors to attain an asset class and the very attractive accompanying yield pick up that was previously unavailable and only available to institutional investors. And that’s why I think ZMBS has had quite a bit of success since its launch. And it is such an attractive piece for investors looking to add that additional yield in what we’re looking at as a historically low-rate environment.

Rob Butler: Well, that sounds good, Matt. And then, I mean one thing we could run clients through is what actually happens if one of the mortgage contracts goes into default? What might they expect? And what’s kind of the process of the trading side and structuring side to deal with that?

Matt Montemurro: It’s actually quite simple. There is no impact. There’s no impact to the holder of the MBS if there is a default on one of those mortgages. So, you know, how is that possible? What is the mechanism that works? So, NHA MBS are fully insured by the CMHC, both in principal and interest, and there’s no limit to the amount of coverage.

So, if a mortgage borrower does default, the issuer of that mortgage will make the payment to the MBS pool, and then they’ll claim that insurance through the CMHC. So, from a holder of the MBS, there is zero impact or disruption from that default. They don’t even know that that default has happened.

So that makes the structure very, very stable. And I think that’s the stability there. Because the issuer of the mortgage has that backstop in the CMHC and ultimately the federal government, that brings stability and that brings the insurance that you’d need to feel comfortable, that if there is an increase in default rates, you as a holder of ZMBS are not going to be adversely affected.

Rob Butler: And then for a client that might be considering the mortgage-backed space, or maybe this is the first time they’re learning about it, where do you see this fitting in a client portfolio? The obvious one being from an asset allocation perspective, you’re going to find it on the fixed-income side of your statement, but what might it replace or complement on the fixed-income sleeve, in your opinion?

Matt Montemurro: Yeah, so you know I think ZMBS is a perfect complement to your core fixed-income allocation, for any investor who’s looking for defensive income with little to no credit risk. You know with its duration of about two years, you know I think it’s very well positioned for the current market. Given that we’re experiencing a steepening yield curve and the threat of rising rates, the ability to reduce that exposure to interest rates, so reduce that overall duration while still maximizing your yield is very, very attractive, and I think it fits very, very well in the current market.

You know I do think that 30/40 basis point yield enhancement does help meet a lot of income needs while not reducing your overall credit quality. So we have a lot of investors who may be concerned about corporate debt, how a corporate spread is going to move over the next year as the economy reopens. You know we’re going to be in for a lot of volatility as we expect this recovery not to be a straight line but to ebb and flow. ZMBS might be a perfect way to provide stability in your portfolio without giving up all the yield you may need from an income perspective.

So, for anyone who’s concerned about credit and who has an allocation to federal government or provincial government bonds, who also may be considering reducing that duration exposure from their core, ZMBS is an excellent way to enhance your yield while keeping yourself protected. And I think it’s a great way for you to not have to give up everything.

And I think that’s one of the challenges in fixed income, where you may look at the market and say, you know what, I am concerned about corporate bonds or credit. I am concerned about the province’s ability to raise debt. Well, you know if you want to take that risk off the table, it usually costs. And the cost comes in the way of yield and therefore you don’t meet your income needs. Whereas ZMBS is a perfect complement to that and a perfect solution for that, because it does provide that yield pick up but still protects you on the downside from a risk perspective.

Rob Butler: Matt, thanks for your talking points today. I think if you’re looking to learn more about the mortgage-backed security space and this particular ETF, ZMBS, do reach out to your ETF specialist. And if you needed to tap one of the traders or structures to also go a little bit deeper in how to trade this product effectively, we would be willing to help you to do that too.

So, from me, Rob Butler, and BMO Global Asset Management, thanks very much for your time today, Matt.

Matt Montemurro: Thanks for having me, Rob. And yes, I think it’s a unique opportunity with ZMBS and I hope everyone got a nice lesson into the mortgage-backed security market.

Rob Butler: Great, thanks Matt.

Announcer: BMO Global Asset Management is a brand name that comprises BMO Asset Management Inc., BMO Investments Inc., BMO Asset Management Corp., BMO Asset Management Limited, and BMO Specialized Investment Management firms.

The viewpoints expressed by the investment manager represent their assessment of the markets at the time of publication. Those views are subject to change without notice at any time without any kind of notice. The information contained herein is not and should not be construed as investment, tax or legal advice to any party. Investments should be evaluated relative to the individual’s investment objectives and professional advice should be obtained with respect to any circumstance.

Any statement that necessarily depends on future events may be a forward-looking statement. Forward-looking statements are not guarantees of performance.

Thank you to Rob Butler and Matt Montemurro for those valuable insights. See you next time.


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