Top 5 BMO ETFs – Review And Comparison

Are you looking to buy the best BMO ETFs? If yes then you are at the right place. There are a bunch of high-performing and quality ETFs from BMO and this article is all about that. So stay tuned. 

Bank of Montreal also known as BMO has been in the financial industry for over 200 years. It is the 8th largest bank based on assets in North America. They are a financial giant with assets worth over $852 billion.

BMOs services include personal and commercial banking, wealth management, and investment banking. Moreover, BMO has a customer base of over 12 million, which are serviced through 3 operating groups: BMO Capital Markets, BMO Wealth Management, and Personal and Commercial Banking. The previous year was good for BMO ETF investors.

The Bank currently has over 24 ETFs, and received the highest-rated grades of fund data at the end of the year 2019; a testament to the skill and experience of the Bank when it comes to investment banking.

I have put together a list of the top five (+2 Bonus ETFs) best-performing ETFs since inception if you are looking to invest in any of BMO’s ETFs. I believe that these five are the best ones to pick if you are looking for a safe bet.

Quick Peek At The Top 5 ETFs From BMO

1. BMO MSCI USA High-Quality Index ETF (ZUQ)

2. BMO MSCI All Country World High-Quality Index (ZGQ)

3. BMO Global Infrastructure Index ETF (ZGI)

4. BMO Low Volatility Canadian Equity ETF (ZLB)

5. BMO MSCI Europe High Quality Hedged to CAD Index ETF (ZEQ)

1. BMO MSCI USA High-Quality Index ETF (ZUQ)

The portfolio strategy here is to replicate the performance of the MSCI USA High-Quality Index as best as they can. Funds are invested majorly in equity markets, while investments in securities are also expected. This is done to best imitate the Index’s performance.

Since its inception on the 5th of November 2014, the funds’ performance has been remarkable coming in at 16.79%. Its performance for its 1, 3, and 5 years is 31.53%, 17.46%, 16.40% respectively.

Pricing: ZUQ deals in Canadian Dollars (CAD), and is currently priced at $42.68. As of close 31st January 2020, it had a price-to-earnings ratio of $27.7 and a price-to-book ratio of $4.9. The fund has a net asset worth of $328.06 million and 125 securities.

Investments: The fund has investments in multiple sectors. Its largest sectoral investment is in Information Technology. Investment in this sector amounts to about 46% of the fund’s investments. The remaining percentages go to Health Care, Consumer Staples, Consumer Discretionary, Industrials and so on.

2. BMO MSCI All Country World High-Quality Index (ZGQ)

The portfolio strategy here is to replicate the performance of the MSCI All Country World High-Quality Index as best as possible.

The fund invests more in the global equity market, all the while screening for high returns in equity, low financial leverage and stable year-over-year growth of earnings. The fund at times invests in securities too.

Since its inception on the 5th of November 2014, the funds’ performance has been remarkable coming in at 14.14%.

Its performance for its 1, 3, and 5 years is 28.2% 15.65%, 14.02% respectively.

Pricing: The fund deals in Canadian Dollars (CAD) and is currently priced at $37.40.

As of close 31st January 2020, ZGQ had a price-to-earnings ratio of $27.7 and a price-to-book ratio of $4.8. This fund has a net asset worth of $83.95 million and 329 securities.

Investments: Sector-by-sector investments are allocated as follows: 36.22% to Information Technology, 18.26% to Health Care, 11.01% to Industrials, 10.60% to Communication Services, 9.45% to Consumer Discretionary, and so on.

The majority of these Investments are geographically allocated in the United States. This accounts for about 73% of the fund’s investments. The remaining percentage goes to other countries including, United Kingdom, Switzerland, France, China, and so on.

3. BMO Global Infrastructure Index ETF (ZGI)

The BMO Global Infrastructure Index ETF was designed to imitate the performance of the Dow Jones Brookfield Global Infrastructure North America Listed (Index) net of expenses. It invests in and holds the Index’s Constituent securities proportionally as they are in the Index.

The fund’s performance is also quite outstanding. Since its inception on the 20th of January 2010, it has been doing relatively well.

Its 1st, 3rd, and 5th-year performances are 25.41%, 8.64%, 7.61% respectively. Its overall performance since its inception is 13.61%.

Pricing: ZGI ETF is currently priced at $42.84 CAD. As close on January 31, 2020, it had a price/earnings ratio of $30 and a price/book ratio of $2.9. The fund’s assets are valued at $272.46 million, and it has 45 securities leftover.

Investments: This fund’s primary sector of investment is the Pipeline sector. It accounts for about 35% of its investments.

The remaining 65% is split across various other sectors with Beverages taking the larger share of this group at 22%. Pharmaceuticals take the least amount of investments at 0.07%.

4. BMO Low Volatility Canadian Equity ETF (ZLB)

The BMO Low Volatility Canadian Equity ETF is designed to bring exposure to low beta weighted sections of Canadian stocks. The security’s responsiveness to market changes is measured by the Beta.

It uses a methodology based on rules to create stocks less sensitive to market changes. This is done from Canadian large-cap stocks. It is rebalanced in June and reconstituted in December.

Also, the fund has a performance rating of 13.41% since its inception on October 20, 2011. It has a performance rating corresponding to 21.83%, 9.58%, and 8.84% for the 1st, 3rd and 5th year respectively.

Pricing: The fund is currently valued at $35.15. It has a price/earnings ratio of $22.4 and a price/book ratio of $2.6. The ETF’s assets are valued at $2,545.69 and 46 securities.

Investments: If you decide to invest in this fund, be knowledgeable in the fact that your money would most likely be put into Financials.

The financial sector accounts for 23.29% of the fund’s investments. Utilities, Consumer Staples, Communication Services, and Real Estate are the next most likely sectors the funds invest in.

The Energy sector accounts for 1.54% of the fund’s investment. This is the lowest amount of investments.

5. BMO MSCI Europe High Quality Hedged to CAD Index ETF (ZEQ)

The portfolio strategy here is to imitate the MSCI Europe Quality 100% Hedged to CAD Index ETF net expenses as best as possible. Your investments will be in the European equity market while the manager screens the market for specified criteria. The foreign currency exposure is converted back to the CAD.

Since its inception on the 10th of February, 2014, the funds’ performance has been remarkable coming in at 10.62%. Its performance for the 1, 3, and 5 years is 32.88% 12.60%, 10.62% respectively.

Pricing: ZEQ ETF’s stocks are currently valued at $23.33. $29.2 is the price-to-earnings ratio and $4.5 is the price-to-book ratio. Its assets are valued to come in at $252.67 million CAD and the securities number 125.

Investments: The major focus here is the Health Care, Industrials, Consumer Staples and Consumer Discretionary sectors. The investments account for about 81% of the fund’s investments. The United Kingdom and Switzerland combined to receive the bulk share of this allocation.

6. BMO Low Volatility International Equity Hedged to CAD ETF (ZLD)

The lowest-performing ETF on this list, but that does not make it any less impressive.

Know that ZLD is built to create more exposure to low beta weighted international stock portfolios in countries outside of North America. Only developed countries are used for this build. The foreign currency is hedged back to CAD.

Also, note that the management fees are reduced by those accumulated in the primary funds.

It’s performance since its inception on October 2, 2016, is 10.15%. Its performance for the 1st year is 16.88%, and the 3rd year is 9.98%.

Pricing: Pricing: ZLD ETF is currently valued at $24.44. $26 is the price-to-earnings ratio and $3 is the price-to-book ratio. Its assets are valued to come in at $93.87 million CAD and securities number 1.

Investments: The major focus is the Industrials, Real Estate, Utilities, Consumer Staples, Communication Services and Health Care sectors. These account for about 81% of the fund’s investments. Japan, France, and Germany combined receive the bulk share of this allocation.

ZSP Vs. VFV Vs. XUU Vs. XUS

First, let’s talk about VFV ETF:

Here’s the link to Vanguard’s VFV: 

• It has the Morningstar Rating of 5/5

• MER expense is a mere 0.08%

• Has an overall portfolio Net Assets of over $2.5B

• If you don’t know – VFV is the Canadian version of VOO (VANGUARD IX FUN/S&P 500 ETF SHS)

• VFV has an Annual Return of 18.56% (Cumulative over the years since inception)

Let’s now jump into BMO’s ZSP ETF:

BMO’s ZSP

ZSP is one of the most popular and highly trades ETF’s from the family of BMO. 

Quick Facts about ZSP: 

• ZSP has a Morningstar rating of 4/5

• MER or Management Expense Ratio is ZSP is low again at 0.09%

• Here’s one of the deal-breakers, ZSP has a portfolio value of net assets over $8B

• ZSP actually owns the underlying stocks directly

• ZSPs total annual total return (since inception) = 19.26% (Morningstar)

In comparison to the price of the individual stocks here VFV is priced around $70 Canadian whereas the price of ZSP is around $43 per stock.

So, in reality, would you say that BMO’s ZSP is safer for the long-term horizon? Again, by long term I mean the time range of anyway between 5 to 10 years at least due to its high volume, liquidity and more than twice the net assets compared to Vanguard’s VFV?

Infact, both VFV and ZSP are essentially the same in terms of Index ETFs tracking the US S&P 500 market. However, there are some key differences and since we’re talking about the best BMO ETFs here, in this article thoughts of bringing this point as well, so that it’s useful to one and all.

If you ask me, I will prefer ZSP over VFV any day.

ZSP vs. XUS vs. XUU

When we talk about comparing ZSP to the likes of XUS Or XUU from Blackrock, the returns over the time period of 3m, 6m, 1 year, 5 years or Max time frame is the same. Especially with the ZSP Vs. XUS. Both these stocks track the US S&P 500 Index. However, if you look at the fine print, you can notice that the ZSP wins here too. Just by a fraction, but still wins.

Also, ZSP as of today trades at around $43 whereas XUS trades at $49 per stock.

Another key difference between ZSP and XUS is the average daily volume of the shares that are traded in the TSX Market, ZSP’s market trading numbers on any given day is almost twice as much as XUS.

When we talk about XUU which tracks the Total US Stock Market, the returns are slightly less compares with the likes of ZSP or XUS, whereas you have the advantage of price falling less than the other two. Especially during the market drops, XUU tends to perform than the ZSP or XUS.

However, its growth is less than ZSP or XUS as well. So, it is your choice again on which ones to choose based on your interest.

XUU currently trades at almost $23 per stock.

Conclusion

There you go, that was the list of the top 5 best ETFs from The Bank Of Montreal (BMO). The final choice is yours, go for the ones you really like and invest in them for the long term for better growth and results. 

All the five ETFs mentioned here are good in terms of growth and dividend history. Also, don’t forget the US and the international markets when choosing the ETF of your choice. Do consider the ETF growth over the past five years at least, demographics and sectors before investing.

If you liked the content of this article and found it helpful, please share this post on social media and help spread the word. Also, let me know if you have any questions or comments below.

Thanks for reading and have a fantastic day! Bye now. 

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