Briefly: Changes to BMO funds and more

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BMO Investments Inc. has announced changes to the distribution policy of BMO U.S. High Yield Bond Fund and changes to the investment strategies of BMO U.S. Dollar Monthly Income Fund, BMO U.S. Special Equity Fund and BMO European Fund.

The distribution policy of BMO U.S. High Yield Bond Fund will change to provide monthly distributions of a fixed amount per unit to unitholders. The first fixed distribution per unit to unitholders will be paid in May 2010.

The investment strategies of BMO U.S. Dollar Monthly Income Fund will change to allow the fund to invest in high yield bonds and debentures, mortgage-backed securities and government agency issued bonds and debentures. In addition, the fund will invest in equity securities through a bottom-up selection process.

Effective June 4, 2010, the investment strategies of BMO U.S. Special Equity Fund will change to allow the fund to invest in attractively valued, small- and mid-sized companies with prospects for above average capital appreciation, invest using a bottom-up process and seek to aggressively identify and capitalize on catalysts that the portfolio manager believes can drive stocks to achieve their intrinsic value.

The investment strategies of BMO European Fund will change. The portfolio manager will employ a fundamental bottom-up investment approach that emphasizes growth and stability of earnings, and will seek to identify attractively priced, high quality companies that show superior long-term economic characteristics.

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HSBC: February retail sales come up soft

Retail sales failed to meet the median in February, when headline sales rose 0.5% month-over-month (the median for that month sat at 1%m/m), HSBC Global Research reports.

The month saw very strong auto sales. Unit vehicle sales leapt 8.1% and dollar sales rose 3.8%m/m. Despite a decrease in the cost of gasoline (-1.7%m/m), gas station sales were up 0.5%.

The Olympics are speculated to have had an impact on clothing and alcohol sales in February. Clothing sales gained 4.3%m/m while beer and alcohol sales were up 3.7%.

On the downward side of things, hardware and specialized building centre sales fell substantially, no doubt due in part to the fact that the Canadian government did not extend their home renovation tax credit to 2010. Build all centre sales dropped 7.6%m/m after enjoying a 14% increase in January. Home furnishing sales were down 3.5m/m in February after gaining 15% the previous month.

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Canadian CPI 0% in March, up 1.4% for the year

In a move that surprised many, headline consumer prices didn’t budge in March, HSBC Global Research reports. This brought inflation down to 1.4% year-over-year, from 1.6% in February.

Core prices were down 0.2%, causing a 1.7%y/y rate, down from 2.1% in February. In part due to the end of the Olympics, recreation prices dropped 1.5%m/m. It is expected that this category will drop further in April due to the fact that the Paralympics extended into the month of March.

The decrease in the year over year rate of inflation is not expected to have an effect on the Bank of Canada’s plans to raise the base interest rate in the third quarter of 2010.

(04/23/10)