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- BMO segregated funds offer a choice of 75% or 100% guarantees on your initial capital upon maturity and in the event of death
- Proceeds are paid directly to a named beneficiary, which avoids probate fees and delays
- Assets can potentially be shielded from creditors in case of bankruptcy
- The funds allows you to lock-in market gains, potentially increasing your guaranteed amount
BMO Segregated Funds (sold as BMO Guaranteed Investment Funds or GIFs) are insurance-wrapped investment products. They allow you to invest in the market (via mutual funds or ETFs) while providing a contractual guarantee that you will not lose more than 0% to 25% of your original deposit at maturity or death.
Pros & Cons:
- Pros: Ideal for business owners needing creditor protection, and individuals wanting to pass wealth privately to heirs
- Cons: Generally comes with higher Management Expense Ratios (MERs) than standard mutual funds
What is a BMO segregated fund?
BMO segregated funds are a combination of an investment component and an insurance component.
The Investment Component: Your money is invested in professionally managed BMO Mutual Funds or BMO ETFs (equities, bonds, or balanced portfolios), allowing your capital to grow with the market.
The Insurance Component: The policy acts as a safety net. It legally guarantees that at the contract’s maturity date (usually 10 to 15 years) or upon your death, your payout will never fall below a pre-defined percentage of your original deposit, regardless of market crashes.
Key features of BMO segregated funds
BMO Guaranteed Investment Funds are designed to provide long-term growth potential while incorporating contractual guarantees that define minimum outcomes at maturity and death.
1. Guarantee options
BMO offers three primary guarantee structures: 75/75, 75/100 and 100/100. These refer to the percentage of your deposits that are guaranteed at maturity and death. For example:
a. BMO GIF 75/75
- Maturity guarantee: 75% of your deposit.
- Death benefit guarantee: 75% of your deposit.
- How it works: This is the lowest-cost option. It allows for the highest equity exposure (more risk, more potential reward) while still providing a basic safety net.
b. BMO GIF 75/100
- Maturity guarantee: 75% of your deposit.
- Death benefit guarantee: 100% of your deposit.
- How it works: This option ensures that no matter what the stock market does, your beneficiaries will receive at least your full original investment. It features automatic death benefit resets every 3 years (up to age 80) to lock in market gains.
c. BMO GIF 100/100
- Maturity uargantee: 100% of your deposit.
- Death benefit guarantee: 100% of your deposit.
- How it works: The most conservative tier. It guarantees full capital protection at both maturity and death. It includes automatic monthly maturity resets to lock in your portfolio’s highest values.
Note that these guarantees do not eliminate market fluctuations during the life of the investment. The value of the fund will continue to rise and fall based on market conditions.
Additionally, BMO specifies that withdrawals reduce both the maturity and death benefit guarantees proportionately. This means that the guarantees are most effective when the investment is held over the long term and not actively withdrawn.
2. Reset features and locking in gains
If the market goes up, BMO automatically “resets” your guaranteed baseline to the new, higher amount. This protects your actual market profits, not just your initial deposit. For example:
- Maturity guarantee resets are available on the 100/100 option and can lock in gains monthly
- Death benefit resets are available on 75/100 and 100/100 options, typically occurring every few years or annually depending on the structure
These features are designed to increase the guaranteed amount if the market value rises, effectively preserving gains without requiring the investor to exit the market.
3. Investment exposure and diversification
BMO typically offers over 40 different underlying funds within its GIF product line. These mirror many of BMO’s standard mutual funds and ETF portfolios but include the GIF insurance wrapper.
The funds are managed by BMO Asset Management and can include:
- ETF-Based Portfolios: BMO Balanced ETF Portfolio GIF, BMO Conservative ETF Portfolio GIF, BMO Growth ETF Portfolio GIF, BMO Equity Growth ETF Portfolio GIF
- Global & Canadian Equities: BMO Concentrated Global Equity GIF, BMO Global Dividend GIF, BMO Canadian Income & Growth GIF
- Balanced & Income Funds: BMO Concentrated Global Balanced GIF, BMO Global Income & Growth GIF, BMO Monthly Income GIF
- Sustainable & ESG Investing: BMO Sustainable Global Balanced GIF, BMO Sustainable Opportunities Global Equity GIF, BMO Balanced ESG ETF GIF
When you sit down with an advisor to open a BMO segregated fund, you can first choose your guarantee level (e.g., 75/100), and then you can select one or more of the above GIFs.
4. Estate planning and probate advantage
Since segregated funds are insurance contracts, they allow investors to name beneficiaries directly. As a result, proceeds can bypass probate and be transferred directly to beneficiaries.
This can make the transfer process faster, more cost-effective, and more private compared to traditional estate settlement.
5. Potential creditor protection
Creditor protection is another potential benefit of BMO segregated funds. When structured correctly with a named beneficiary, segregated fund assets may be protected from creditors in certain situations.
The “Prestige Class” advantage
While segregated funds are often criticized for carrying higher Management Expense Ratios (MERs) than traditional mutual funds, BMO offsets this for higher-net-worth investors through its Prestige Class pricing.
Once an investor accumulates $250,000 or more across one or more BMO GIF contracts, BMO automatically lowers their MER. What makes this feature stand out is its seamless execution: the fee reduction is applied automatically without requiring any manual fund switches, signed agreements, or extra paperwork.
Your deposits are simply shifted into the lower-cost Prestige Class equivalent, ensuring that as your wealth grows, the cost of your insurance protection efficiently scales down.
Pros and cons of BMO segregated funds
| Pros | Cons |
| Capital Protection: Guarantees 75% to 100% of your deposit at maturity/death | Higher Fees (MERs): The insurance wrapper makes them more expensive than mutual funds. |
| Estate Efficiency: Bypasses probate fees and legal delays for fast payouts | No Short-Term Protection: Your account value will still drop during daily market dips |
| Market Upside: You stay invested in equities and bonds for growth potential | Withdrawal Penalties: Early withdrawals proportionally reduce your guaranteed payout limits |
| Asset Shielding: Offers potential creditor protection for business owners | Long Commitment: You must hold the fund to maturity (often 10–15 years) to get the guarantee |
How BMO segregated funds align with different life stages
BMO does not position its Guaranteed Investment Funds (GIFs) as a one-size-fits-all solution. Instead, BMO maps specific guarantee structures to your age, risk tolerance, and shifting financial priorities.
1. Pre-retirement (ages 45–55): Growth with basic protection
For investors in their mid-career stage, BMO positions the 75/75 option as a balance between growth and cost efficiency. At this stage, the priority is still wealth accumulation, and investors are generally more willing to accept market volatility. However, there is also an emerging need for some level of downside protection. This option offers:
- Lower fees compared to higher guarantee options
- Greater exposure to equity-based investments
- A minimum 75% death benefit guarantee
2. Pre-retirement transition (ages 55–65): Protection becomes a priority
As investors approach retirement, the focus begins to shift from growth to preservation. BMO positions the 100/100 option as the most suitable for this phase, where protecting accumulated wealth becomes increasingly important. This option offers:
- Up to 100% capital protection at maturity
- 100% death benefit guarantee
- Monthly maturity guarantee resets, which lock in gains automatically (up until 10 years of contract duration)
- Optional death benefit resets to increase legacy value
3. Retirement and estate transfer (ages 65–90): Focus on legacy
For retirees, the primary objective often shifts toward estate preservation and efficient wealth transfer. BMO positions the 75/100 option as the most relevant in this phase.
While the maturity guarantee remains at 75%, the death benefit guarantee increases to 100%, ensuring that beneficiaries receive the full invested amount regardless of market conditions. This option offers:
- Up to 100% payout to beneficiaries at death
- Automatic death benefit resets (typically every 3 years or annually)
- Efficient wealth transfer with reduced probate impact
- Continued access to market growth
Note that automatic death benefit guarantee resets terminate on the last policy anniversary before the annuitant’s 80th birthday. A client investing between ages 81 and 90 will never receive an active death benefit reset.
4. Business owners and professionals: Protection beyond investing
BMO also identifies a separate use case for entrepreneurs and professionals, where the focus extends beyond investment performance. For this group, the 75/75 option is positioned as a tool for:
- Potential creditor protection
- Maintaining access to funds for business needs
- Lower-cost investment exposure
Advisors take: Our BMO segregated funds review
In our opinion, BMO segregated funds are built around a relatively streamlined structure compared to some competitors like Sun Life or Manulife.
Instead of offering multiple branded contracts, BMO focuses on a unified GIF framework with different guarantee levels and investment options. This simplicity is what sets them apart.
Where BMO Excels:
- Automatic Prestige Class Pricing: BMO automatically drops your Management Expense Ratio (MER) once your household assets cross $250,000 in qualifying GIF contracts.
- Cost-Efficient ETF Portfolios: They offer ETF-based portfolios inside their segregated funds. This keeps the underlying management costs noticeably lower than competitors.
- Clear Life-Stage Alignment: The three distinct guarantee tiers make it incredibly easy for an advisor to match the exact product to an investor’s current life stage.
Where BMO Could Improve:
- Strict Long-Term Commitment: Like all segregated funds, withdrawing your money before the 10-to-15-year maturity date proportionally reduces your guaranteed payout.
- Fewer Customization: While BMO’s simplicity is its greatest strength, ultra-high-net-worth individuals with highly complex corporate or estate structures might find fewer customizable options compared to other insurance providers.
Overall, BMO Guaranteed Investment Funds earn a solid 4.5 out of 5.
What other investment products does BMO offer?
BMO offers a comprehensive range of investment solutions across asset classes and risk profiles. Each product serves a distinct role within a financial plan, and understanding this ecosystem helps clarify where segregated funds fit.
- Mutual funds: BMO offers actively managed mutual funds across equity, fixed income, and balanced categories. These funds provide diversification and professional portfolio management, with exposure to Canadian, U.S., etc.
- Exchange-Traded Funds: BMO is one of Canada’s largest ETF providers, offering a wide range of low-cost, index-based and actively managed ETFs. However, ETFs do not offer capital protection, estate benefits, or guarantees like segregated funds.
- Guaranteed Investment Certificates (GICs): BMO GICs provide fixed returns over a specified term and guarantee 100% of the principal at maturity. They are designed for capital preservation and predictable income but do not offer any market participation.
- Annuities (BMO Insurance): BMO offers annuity products that convert a lump sum into a guaranteed income stream for a fixed period or for life. These are typically used in retirement to provide income stability.
How to buy BMO segregated funds in Canada?
BMO Guaranteed Investment Funds are insurance contracts, which means they must be purchased through a licensed advisor rather than a self-directed platform.
- Work with a licensed advisor: Since BMO GIFs combine investments with insurance features, an advisor helps you choose the right guarantee option (75/75, 75/100, or 100/100), select suitable funds, and structure the contract correctly.
- Set up the contract properly: This includes selecting your investment allocation and naming beneficiaries, which is key to unlocking estate planning benefits like faster wealth transfer.
- Understand key conditions: Important details such as the maturity period, how withdrawals affect guarantees, and how reset features work should be clearly understood before investing.
Platforms like PolicyAdvisor simplify this process by helping you compare segregated fund options, understand trade-offs, and get expert guidance, all in one place.
Frequently asked questions
What guarantees do BMO GIFs provide?
BMO GIFs typically offer 75% to 100% guarantees on your invested capital at maturity and/or death, depending on the option selected (75/75, 75/100, or 100/100). At maturity or death, the payout is the higher of the market value or the guaranteed amount.
Do BMO segregated funds protect against market losses?
Not during the investment period. The value of your investment will still rise and fall with the market. The guarantee only applies at specific events like maturity or death, ensuring a minimum outcome over the long term.
Do withdrawals affect guarantees?
Yes. BMO clearly states that withdrawals reduce both maturity and death benefit guarantees proportionally. This means frequent withdrawals can significantly reduce the level of protection.
What is the maturity period for BMO segregated funds?
BMO segregated fund contracts generally have a 10-year maturity period, which is when the maturity guarantee applies. Exiting before this period means the guarantee may not be realized.
Do BMO segregated funds bypass probate?
They can. When a beneficiary is named, proceeds may be paid directly to that person, helping avoid probate delays and reducing administrative complexity. However, this depends on proper structuring and provincial rules.
BMO Segregated Funds offer market growth potential with 75%–100% capital guarantees, along with estate planning benefits such as probate bypass and potential creditor protection. They are best suited for long-term investors seeking growth with added financial security.
