When I first started investigating high interest savings account options with BMO InvestorLine I believed that they were sold as mutual funds. If I clicked on one of the choices, such as the ICICI high interest savings account, InvestorLine opened the usual mutual fund purchase screen. That made me wonder: is there a 90 day holding period for the HISAs offered by InvestorLine?
Mutual Funds Require a Minimum Holding Period of 90 Days…
That Mutual Fund Order Entry screen includes a statement that “All mutual fund orders are subject to BMO InvestorLine Investment Policies and Minimums or third party fund company minimums.” When you read the Investment Policies and Minimums, they clearly state:
“Early Redemption Fee: Exempting Money Market and TBill funds and back load (DSC) funds, an early redemption fee of 1%, subject to a minimum of $43 ($35 for electronic orders) will be charged for funds held for less than 90 days. Switch orders are subject to the same early redemption fee.”
From that, I concluded, apparently incorrectly, that an investment in a high interest savings account was subject to a 90 day hold to avoid any early redemption fee.
…But Are High Interest Savings Accounts Mutual Funds?
However, I decided to ask BMO InvestorLine directly to clarify this using their MyLink internal email system. The reply surprised me.
“High Interest Savings accounts are not mutual funds.
“They bear variable interest rates and can be redeemed any time. There is no lock in period like GIC and no need to keep it for 90 days to avoid being charged Early Redemption Fee of $35 for redeeming it like any mutual fund trade.
“We process the trades of these High Interest Savings products through mutual fund trade platform, but they are not mutual funds.
“Unlike mutual funds, they are guaranteed by CDIC up to $100,000.”
(Although on the High Interest Savings Account page, BMO actually lists whether each account is CDIC insured. The US dollar accounts are not CDIC insured. CDIC does not insure any USD accounts.)
Apparently, they need to update their system to create a new Order Entry screen for these accounts, or they need to update their Investment Policies and Minimums screen to include High Interest Savings Accounts along with Money Market funds and TBill funds as being exempt from a holding period.
High Interest Savings Accounts are Not Subject to a 90-day Minimum Holding Period
So the verdict is that the high interest savings accounts offered by BMO InvestorLine are not subject to a 90-day holding period.
This is good news.
Provided, of course, you have the minimum
$25,000 to initially invest!
UPDATE: As of April 11, 2013, BMO InvestorLine is offering the BMO AAT770 and AAT780 funds with minimum purchase amounts of $5,000.
UPDATE: As of September, 2013 you can no longer invest in any high interest daily savings account funds except BMO’s own AAT770 and AAT780 from what I can find on their site. The minimum balance remains $5,000.
Have you purchased a high interest savings account from InvestorLine? Has it worked well for you? Please share your experiences with a comment.