Investing in High Interest Savings Account Mutual Funds in BMO InvestorLine Accounts

BMO InvestorLine permits investors to hold cash in certain High Interest Savings Account mutual funds. There is a minimum investment and a minimum additional investment.

Written: 2012
Reviewed: 2023
Updated: 2013; 2023

Prior to September 2013, you could invest in HISA mutual funds issued by several different financial institutions. After 2013, BMOIL only offered its own HISA mutual funds.

This type of savings account mutual fund might be worth considering if you are going to need a large amount of cash in a fairly short time-frame. However, it’s not an ideal solution to the classic problem of “where can I put $31 in dividends where it will earn interest while I wait to accumulate enough to buy something useful.”

Be careful of using non-BMO mutual funds to park your cash for a short time in a BMO InvestorLine account. Some mutual funds charge a fee if they are bought and then sold within a short period of time, such as within 90 days after their purchase. There is no fee for buying and selling the BMO InvestorLine linked HISA funds but there is no such guarantee for other funds. Read any details and confirm by phone with InvestorLine if there is any doubt about a fund you are considering buying.

Doesn’t BMO Pay Interest on Cash Balances in its InvestorLine Accounts?

It did once upon a time.

So Where Can I Put My Cash at BMO InvestorLine?

BMOIL does offer some BMO Money Market and T-bill funds You can check the site for details on initial minimum purchases and minimums for subsequent additional purchases of the same fund. Be aware that Money Market funds can lose money. I am not sure if T-bill funds can lose money or not. You should check before purchasing any.

BMOIL does offer some cashable GICs. You should carefully read any terms and conditions. Some cashable GICs can only be redeemed (cashed out) at least 30 calendar days prior to maturity. Cashing early also often forfeits all of the interest earned. Make sure you understand the rules before you buy.

BMOIL offers high interest savings account mutual funds for cash deposits in both Canadian and US dollars. These funds calculate interest on the lowest daily balance and pay it monthly. The funds are CDIC insured subject to the usual limits.

What Mutual Fund High Interest Savings Accounts in Canadian Dollars and US Dollars Does BMO InvestorLine Sell?

In 2023, InvestorLine is offering 3 Canadian dollar high interest savings account funds, called BMT104, BMT109, and BMT114. In 2023 BMO InvestorLine is offering 3 US dollar high interest savings account mutual funds called BMT124, BMT129, and BMT134.

As with regular bank savings accounts, the interest rate can and does change often.

There is a minimum purchase and holding requirement of $1000 CAD for the Canadian dollar funds and $1000 USD for the US dollar funds.

Additional purchases require a minimum of purchase of $50 CAD or $50 USD respectively.

The settlement date for the purchase or sale of units of a fund are the Transaction Date plus One Business Day. Be careful that you submit the purchase or sale request early enough to meet the closing time for the mutual fund desk (which can be earlier than the close of the stock market.) Also be aware of which days are business days for the mutual fund, as this can be affected by US holidays, federal holidays etc.Just because we have to work doesn’t mean everyone is working that day!

In 2012 and 2013, InvestorLine sold units of a fund called AAT770 for Canadian dollar investments and AAT780 for US dollar investments. These funds have been re-named.

Why Not Just Connect to Another Institutions High Interest Savings Account?

This article focuses on investors with LIRA, RRIF, RRSP, RESP or TFSA accounts at self-directed brokerages. For these accounts, there is a high fee for transferring funds out to another institution. HISA funds offer an important option within registered accounts.

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What Happens When You Sell a BMO Mutual Fund in Your BMO InvestorLine Account

I admit it. In the heady days of the late 1990s I bought a BMO mutual fund for my RRSP. Actually I bought 3. Eventually the time came when I moved these mutual funds into an account at BMO InvestorLine and then in 2012, I decided to sell them. Here’s what happened.

Written: 2012
Reviewed: 2023
Revised: 2023

NOTE: Starting in 2022, the rules for fees for mutual funds have been changing in Canada. This is impacting how some brokerages handle the purchase and sale of the funds. Please check fee information carefully before buying or selling a mutual fund in case the rules described here have been changed. For example, CIBC Investor’s Edge has stated it will change how it charges for mutual funds starting April 1 2023, but it hasn’t stated how it will change  yet!

Why Did I Buy BMO Mutual Funds in My RRSP?

In best “Wealthy Barber” manner, I bought small amounts of several mutual funds in my RRSP every month for a while to dollar cost average. Once some promotion or other ended, I stopped buying any more units. After a spectacular drop in market value against book value, I stopped reading my statements. For about 10  years.

I do not recommend others copy this style of investing!

However, after ten years, the funds were showing respectable performances. So I left them alone, as a sort-of in joke with myself.

Fast forward to last week in 2012, when I finally decided to get rid of the first of these funds. I had a very small holding of the BMO Dividend Fund. During the year after I brought the fund into my self-directed account at BMO InvestorLine, the market value had dropped. Eventually it rallied up to within $100 of what it was worth when I moved it in. So I decided to sell  it. I could make $100 just “week-trading” TD shares, and get a respectable dividend if I actually had to wait months or even years to make that $100.

So before the 2 p.m. deadline for sales of BMO mutual funds, I placed an order to sell ALL.

After the Sell All Order Was Submitted
The next day, Thursday, my order was reported as Filled, but nothing changed in my Holdings report.

The next, next day, Friday, the sale appeared in my Transaction History list back dated to the day I submitted the Sell order. The cash also appeared in my account, ready for me to re-invest.

However, it also created a puzzle. The Transaction History said the money was for the sale of only 121 units, not 121.759 units.

Of course it was now a Friday, so I decided to give it another business day or two to see what had happened to my partial units.

Did I Give Away My Partial Units in the Mutual Fund?
By Monday, I had an additional line item in the Transaction History. It says that .759 units were released at no price with 0 value! I started to steam a bit (that’s over $30 worth of cash, buster!) till I remembered I’m dealing with BMO InvestorLine. Reporting the way I expect seems to be unusual for them.

So I went online and checked the closing price for the BMO Dividend Fund for the day I sold the units. Then I divided the dollars deposited in my account by that price. The result: 121.759. So I had been paid for the partial units, they just didn’t report that I had been paid the way I expected.

BMO InvestorLine Has Room for Improvement in Reporting the Sale of the Mutual Funds

So all’s well that ends well, although the reporting in 2012, frankly, could stand some improvement. It should either report all of the units, whole and partial, sold and the price and the total sale value as one line item in the Transaction History; Or, it should report two lines, each with the number of units or partial units, the price and the total sale value of that part of the transaction. But perhaps that would make it a little too easy for users?

Do You Pay a Fee to Sell a Mutual Fund Held in a BMO InvestorLine Account?

There was no fee for the sale of this no-load fund. In 2021, BMO InvestorLine did not charge a fee on virtually all of the mutual funds it offered to buy and sell. However, sometimes there is a fee charged by the source of the mutual fund. Always check the prospectus or phone a mutual fund company before buying or selling their fund, no matter what self-directed broker you may be using to make the purchase or sale. Always check the brokerage fee schedule, too, for any changes that could add new fees. I can’t keep up with them!

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Have you sold a mutual fund through a self-directed plan? Did anything surprise you? Any sneaky fees or commissions we should know about? Please share your experience with a comment.