Canada has the luxury of having a plethora of ETF providers for you to choose from.
While many like to look outside of the big five banks for ETF investing, there are also those that need the comfort of that well-known brand name.
The Bank of Montreal is one of those providers. In my opinion, it has the best ETF lineup of any big bank provider in Canada. Below are our top picks for the best BMO ETFs in Canada.
BMO ETFs Overview
The allure of Canadian stocks lies in the country’s robust natural resources, banking sector, and real estate market, among other factors. BMO ETFs, with their expertly curated portfolios, provide a straightforward entry point into these sectors.
BMO Global Asset Management currently has over 24 ETFs and is highly regarded as one of the top ETF providers in the country. It features a wide range of funds tracking different indices and aligning with various investment goals and risk tolerance levels.
Choosing which one to invest in can be difficult if you don’t have much information about the funds.
This guide to the best BMO ETFs in Canada will give you much-needed guidance on the most prominent funds offered by the fund manager.
Best BMO ETFs In Canada
- BMO MSCI USA High-Quality Index ETF (ZUQ.TO)
- BMO MSCI All Country World High-Quality Index ETF (ZGQ.TO)
- BMO Global Infrastructure Index ETF (ZGI.TO)
- BMO Low Volatility Canadian Equity ETF (ZLB.TO)
- BMO MSCI Europe High-Quality Hedged To CAD Index ETF (ZEQ.TO)
- BMO Low Volatility International Equity Hedged To CAD ETF (ZLD.TO)
- BMO S&P 500 Index ETF (ZSP.TO)
- BMO Growth Index Portfolio ETF (ZGRO.TO)
- BMO Balanced Index Portfolio ETF (ZBAL.TO)
- BMO Conservative Index Portfolio ETF (ZCON.TO)
BMO MSCI USA High-Quality Index ETF (ZUQ) is a fund designed to provide you with investment returns by emulating the performance of the MSCI USA High-Quality Index to the extent possible and net of expenses. The fund invests primarily in equity securities to replicate the performance of the underlying index.
BMO ZUQ ETF invests in the US stock market, screening its constituent securities for high return on equity, stable year-over-year earnings growth, and low financial leverage when rebalancing the portfolio.
The fund is an ideal way for you to gain exposure to high-quality US stocks. The fund deals in Canadian dollars, and you can benefit from local currency appreciation for the price of underlying securities held by the fund.
BMO MSCI All Country World High-Quality Index ETF (ZGQ) is a fund designed to provide you with investment returns by emulating the performance of the MSCI All Country World High-Quality Index to the extent possible net of expenses.
BMO ZGQ ETF also focuses primarily on equity securities to replicate the performance of the underlying index.
BMO ZGQ ETF takes on a more geographically diversified approach to investing in equity securities. The fund manager screens equity securities from various global stock markets for high returns on equity, low financial leverage, and stable year-over-year growth of earnings.
The fund could be an ideal way for you to gain exposure to a geographically diversified basket of high-quality equity securities.
BMO Global Infrastructure Index ETF (ZGI) is a fund designed to provide you with investment returns by replicating the performance of the Dow Jones Brookfield Global Infrastructure North America Listed Index, to the extent possible and before expenses.
The fund replicates the underlying index and holds securities in proportion as the assets are held by the index.
BMO ZGI requires its constituent securities to have at least a US$500 million market capitalization and a three-day average daily trading volume of US$1 million, and at least 70% of the company’s cash flows must derive from business involvement in some capacity with infrastructure assets.
BMO Low Volatility Canadian Equity ETF (ZLB) is a fund designed to provide you with relatively safer returns from the Canadian equity security market by offering you exposure to low beta-weighted sections of Canadian stocks.
The fund uses a strategy to create a portfolio of large-cap Canadian stocks that are less prone to market volatility.
The fund is designed for investors looking for growth solutions by investing in the Canadian stock market without too much capital risk.
It is one of the most substantial ETFs issued by BMO Global Asset Management, boasting a massive AUM.
BMO MSCI Europe High-Quality Hedged To CAD Index ETF (ZEQ) is a fund designed to provide you with investment returns by replicating the performance of the MSCI Europe Quality 100% Hedged to CAD Index to the best of its ability and net of expenses.
BMO ZEQ focuses primarily on equity securities, diversifying its resource allocation across high-quality stocks trading throughout European stock markets.
The fund manager screens the underlying securities for a high return on equity, stable year-over-year earnings growth, and low financial leverage to provide you with decent returns.
The fund is ideal for investors looking to invest in a group of high-quality European stocks while using currency hedging to mitigate the impact of currency price changes.
BMO Low Volatility International Equity Hedged To CAD ETF (ZLD) is a fund designed to provide you with returns by offering you exposure to a low beta weighted and geographically diversified portfolio of equity securities from developed countries outside of the North America.
BMO ZLD uses a rules-based strategy to create a portfolio of equity securities that are less prone to volatility in stock markets.
The foreign currency exposure to international equity securities held by the fund is hedged back to the Canadian dollar to mitigate the impact of currency fluctuations. Since BMO ZLD ETF is essentially a fund that holds funds, its management fees are lowered by the fees accumulated in the underlying funds.
BMO S&P 500 Index ETF (ZSP) is a fund that is designed to provide you with investment returns by replicating the performance of the S&P 500 Index, to the extent possible and net of expenses.
BMO ZSP ETF is a passively-managed fund that simply rebalances to emulate the holdings of the underlying index as they are reflected in the S&P 500 Index, making its management fees significantly lower than many others on the list.
BMO ZSP ETF is designed to give you exposure to diversified US equity securities, it is balanced every month, and it boasts a low MER. It is a massive fund with huge AUM, and it has a small dividend yield.
Fund managers use currency hedging as a strategy to offset any losses created by the price movements of securities held by any currency-hedged fund. BMO ZSP ETF is not a currency-hedged fund, but it has a twin fund issued by BMO Global Asset Management that is hedged to the Canadian dollar.
BMO ZUE ETF tracks the same index as BMO ZSP ETF but without currency hedging. Suppose that the US dollar goes on a weak run against the Canadian dollar. In that case, the currency price movements can have a negative impact on your returns for funds invested in BMO ZSP ETF.
However, the US dollar typically tends to have a better long-term performance than the Canadian dollar, making it better to hold BMO ZSP ETF instead of BMO ZUE ETF if you have a long investment horizon.
BMO Growth Index Portfolio ETF (ZGRO) is a fund designed to provide you with long-term capital gains by investing in a portfolio of fixed-income and equity security ETFs.
BMO ZGRO is a fund of funds that invests in a broad range of indexed equity and fixed-income ETFs to provide you with a one-ticket solution to a wide range of securities geared towards growth.
BMO ZGRO is designed for growth-seeking investors, focusing primarily on growth-centric ETFs. The fund is heavily weighted in equity securities, accounting for roughly 80% of its entire asset allocation while providing you with a relative degree of stability through 20% of its resources allocated to fixed-income assets.
The fund is primarily designed for investors with a long-investment horizon with medium risk tolerance.
BMO Balanced Index Portfolio ETF (ZBAL) is a fund of funds designed to provide you with moderate long-term capital gains by investing in a portfolio of fixed-income and equity security ETFs.
BMO ZBAL takes on a slightly conservative approach to investing in a broad range of index equity and fixed-income ETFs geared towards moderate growth.
BMO ZBAL is called a balanced portfolio that uses an asset allocation split of 60% to equity securities and 40% to fixed-income securities to offer you growth while retaining a more significant degree of safety.
The result is a fund that can enjoy stability through fixed-income assets but grow or decline based on its higher exposure to equity securities.
BMO Conservative Index Portfolio ETF (ZCON) is another all-in-one ETF solution offered by BMO Global Asset Management, designed to provide you with income and moderate long-term capital gains by investing in a portfolio of fixed-income and equity security ETFs.
BMO ZCON is the third of the three all-in-one ETFs offered by BMO Global Asset Management and is geared toward investors with low-risk tolerance.
BMO ZCON ETF has an asset allocation split of almost 60% toward fixed-income assets and 40% toward equity securities.
It means that your returns from the fund will be virtually safe through its exposure to fixed-income assets, but your returns can also grow through capital appreciation due to the exposure to equity securities. The fund is designed for investors who do not want to take on too much capital risk.
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ETFs have exploded in popularity in the last few years, and with several hundred to choose from, it can easily become overwhelming for investors to narrow down their options.
BMO Global Asset Management is one of several ETF providers in Canada, and its ties with one of Canada’s most substantial financial institutions might give you the peace of mind that your investment capital is relatively safe if you invest it in a fund offered by the fund manager.
I hope this list of the best BMO ETFs in Canada highlights and explains a few funds issued by BMO Global Asset Management that align with your investment goals. If you are interested in investing in a basket of Canadian banking stocks, check out my list of the best Canadian bank ETFs in Canada.