BMO pulls out of mutual fund partnership with U.S. tech investor Cathie Wood

Bank of Montreal’s BMO-T asset management arm has ended its ill-timed partnership with Cathie Wood, the prominent U.S. portfolio manager whose firm rose to stardom during the American technology boom, only to crash and struggle to restore its glory.

BMO Investments Inc. and ARK Investment Management launched three mutual funds and three exchange-traded funds in late 2022, a year after the U.S. tech bubble burst. At the time, Ms. Wood’s flagship ARK Innovation ETF in the U.S., which invests in stocks such as Tesla Inc., Roku Inc. and Roblox Corp., had plummeted 67 per cent. However, she remained notoriously optimistic about the disruptive innovation sector and said a structural shift that would benefit its companies would continue to play out.

While many technology stocks did rebound from the 2022 lows, the ARK Innovation ETF never found its footing again. The fund closed Monday at US$44.39, down nearly 70 per cent from its 2021 peak.

BMO announced in a regulatory filing last week that it was terminating all three BMO mutual fund ARK investments, as well as the three ETF versions. All six BMO funds were actively managed by Ms. Wood and tracked similar versions of her U.S. flagship funds. Investors who hold units in the BMO ARK Genomic Revolution Fund, BMO ARK Innovation Fund and BMO ARK Next Generation Internet Fund will be able to redeem and trade their investments up until July 7, when the funds will be delisted from the Cboe Canada exchange.

Investor interest in BMO’s partnership with ARK has been lacklustre among Canadians. For example, the BMO ARK Innovation ETF currently only has about $27-million in assets, followed by the BMO ARK Genomic ETF and BMO ARK Next Generation Internet ETF both trailing at just above $5.5-million and $5.9-million, as of April 20.

BMO Global Asset Management spokesperson Jeff Roman, asked about severing ties, confirmed in an e-mail that the bank is no longer in a partnership arrangement with Ms. Wood but declined to comment on the reasoning. BMO simply said it regularly evaluates its product shelf to ensure the “products are highly competitive and well-positioned to serve Canadians’ investment needs.”

Mr. Roman added that for investors looking to gain exposure in the emerging technology sector, the bank provides the BMO Global Innovators Fund.

Ms. Wood did not respond to a request for comment.

In the early 2020s, Ms. Wood gained popularity for her daily stock selections. Some of her funds jumped more than 360 per cent from April, 2020, to the peak of the pandemic in February, 2021, as demand grew for online health services, video conferencing and innovative science labs to develop vaccines.

Then, in late 2021, the technology sector began to see share prices plummet.

During in an interview in late 2022, Ms. Wood told The Globe and Mail that she was not discouraged by the falling share prices that led to major layoffs at tech giants Meta Platforms Inc. and Shopify Inc. She said the sharp drops were partly a correction of the oversized gains of the past two years, and were not indicative of the long-term potential for her technology funds.

In 2025, technology companies have been experiencing sharp declines again, as the U.S continues to feel the ripple effects of U.S. President Donald Trump’s trade war.

Ms. Wood’s Ark Innovation ETF in the U.S. is down more than 28 per cent, year-to-date, as of April 17.

Ms. Wood has also partnered with other Canadian asset managers. In 2016, ARK Investment Management moved north of the border through a partnership with now-defunct ETF provider Emerge Canada Inc.

Last month, Ontario’s securities watchdog launched an investigation against Emerge Canada Inc.; its founder, Lisa Langley; and its chief financial officer, Desmond Alvares, alleging the company improperly borrowed $6-million of investor money to cover operating expenses to run the company. Emerge had borrowed the money from five of the Emerge ARK ETFs it manages, starting in 2019.

A Capital Markets Tribunal hearing for the Emerge allegations has been scheduled for July 29.