In this post, we’ll go over the best growth ETFs offered by BMO. Our analysis focuses on long-term performance. Only ETFs with a sustained historical performance over a period of 5 years were considered. For each ETF, we will analyze strategy, performance, management fees and volatility.
Management Fees and Volatility
| Name | MER* | Beta* |
| ZQQ – BMO Nasdaq 100 Hedged To CAD Index | 0.39 | 1.28 |
| ZUQ – BMO MSCI USA High Quality Index | 0.33 | 0.92 |
| ZGQ – BMO MSCI All Cntry Wrld High Qlty | 0.45 | 0.90 |
| ZID – BMO India Equity Index ETF | 0.72 | 1.24 |
| ZBK – BMO Equal Weight US Bank ETF | 0.35 | 1.47 |
| ZSP-U – BMO S&P 500 Index ETF USD | 0.09 | 0.95 |
| ZSP – BMO S&P 500 Index ETF (CAD) | 0.09 | 0.98 |
Source: TD Market research , MER: Management expense ratio is the total charges charged by the fund including administration and management fees. Beta (60 months): is a measure of volatility. The higher the Beta, the more risky the title. A Beta of 1 means the stock has the same volatility as the market.
Performance Comparison
Updated daily
Analysis (Best ETF Canada by BMO):
– ZQQ (BMO Nasdaq 100 Equity) tops BMO’s Best Equity ETFs. ZQQ has had the best performance over the past 10 years. The reason is simple and we can summarize it in FAANG (Facebook, Amazon, Apple, Netflix and Google). These stocks represent almost a third of the Nasdaq 100. ZQQ had an annualized average performance of 26.53% over a 5-year period with a volatility of 1.28. ZQQ is ideal for an investor with a long-term horizon who is looking for a portfolio of quality securities with significant growth potential. In terms of sector allocation, ZQQ offers great exposure to the technology sector.
ZQQ has assets under management of $ 1.57 billion. It is one of the most popular funds in Canada.
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– ZUQ (BMO MSCI US High Quality) and ZGQ (BMO MSCI World High Quality) both performed well. The two funds have the same stock selection methodology. Instead of replicating a stock market index, they set up a kind of pre-selection to take only particular securities. These securities must meet criteria linked to yield and liquidity.
ZUQ and ZGQ are excellent choices for equity ETFs to hold for the long term. They offer diversified portfolios. The risk / return ratio is interesting considering that the ZUQ and ZGQ have a Beta of less than 1.
– ZSP and ZSP-U (BMO S&P 500 Index ETF) are definitely the best BMO ETFs for any investor who wants an index fund with low management fees. The S&P 500 Index is arguably the most representative of the US economy and includes the largest US stocks. ZSP is not hedged against currency risk. ZSP-U can only be purchased in US $. The choice between hedged, unhedged or US $ funds depends primarily on our anticipation of the exchange rate. In the long run, the impacts due to exchange losses or gains tend to be minimal.
– ZBK (BMO Equal Weight US Banks) provides exposure to the US banking market. The Beta was 1.47 over 5 years. So, this fund is almost one and a half times more volatile than the market. The fund had an annualized average performance of 11.48% over 5 years.
ZBK has assets under management of $ 880 Million.
– ZID (BMO Indian Equities) is an ETF that focuses on Indian companies. Therefore, it allows to diversify an existing portfolio by providing exposure to a promising emerging market. The fund had an average annualized performance of 14.58% over 5 years.
ZID is relatively a small fund with $107 Million in assets under management.
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1) ZQQ – BMO Nasdaq 100 Hedged To CAD Index ETF
ZQQ Strategy
BMO Nasdaq 100 Equity Hedged to CAD seeks to replicate, to the extent possible, the performance of an index of securities of companies listed on the NASDAQ, net of expenses. ZQQ ranks first in our ranking of the best BMO ETFs to hold for long term.
The ZQQ is hedged for currency risk.
The Nasdaq-100 is one of the world’s leading large-cap growth indices. It includes 100 of the largest national and international non-financial companies listed on the Nasdaq by market capitalization.
This index is dominated by companies in the technology sector.
47.93% Technology
19.77% Communications Services
18.25% Consumer Discretionary
ZQQ Morningstar rating
(Source: TD Market research)
ZQQ Holdings
| Weight (%) | Name |
| 10,52% | APPLE INC |
| 9,47% | MICROSOFT CORP |
| 8,17% | AMAZON.COM INC |
| 3,98% | ALPHABET INC |
| 3,97% | FACEBOOK INC |
| 3,73% | TESLA INC |
| 3,56% | ALPHABET INC |
| 3,08% | NVIDIA CORP |
| 2,33% | PAYPAL HOLDINGS INC |
| 2,00% | COMCAST CORP |
2) ZUQ – BMO MSCI USA High Quality Index
ZUQ strategy and sector allocation
The BMO MSCI USA High Quality seeks to replicate, to the extent possible, the performance of the MSCI USA Quality Index, net of expenses. The index is 100% invested in the United States.
The fund selects the securities according to the criteria below:
• Large or medium-sized business;
• High return on equity;
• Sustained growth in revenues;
• Low debt ratio
ZUQ Sector allocation – Top 3
45.83% Technology
20.49% Healthcare
10.80% Communication service
ZUQ Morningstar rating
(Source: TD Market research)
ZUQ Holdings
| Weight (%) | Name |
| 5,11% | FACEBOOK INC |
| 5,00% | MICROSOFT CORP |
| 4,84% | APPLE INC |
| 4,50% | JOHNSON & JOHNSON |
| 4,01% | MASTERCARD INC |
| 3,87% | NVIDIA CORP |
| 3,80% | VISA INC |
| 3,74% | UNITEDHEALTH GROUP INC |
| 2,71% | PAYPAL HOLDINGS INC |
| 2,71% | ADOBE INC |
3) ZGQ – BMO MSCI All Cntry Wrld High Qlty ETF
ZGQ Strategy and sector allocation
The BMO MSCI World High Quality ETF seeks to replicate, to the extent possible, the performance of the MSCI All Country World High Quality Index, net of expenses. ZGQ is a global ETF. While ZUQ invests mainly in the American market.
The fund selects the securities according to the criteria below:
• Large or medium-sized business;
• High return on equity;
• Sustained growth in revenues;
• Low debt ratio
ZGQ Geographical breakdown of the Top 5 portfolio
68.32% United States
5.35% Switzerland
3.91% Taiwan
3.42% United Kingdom
3.38% China
ZGQ Sector allocation – Top 3
38.95% Technology
15.57% Healthcare
13.38% Communication service
ZGQ Morningstar rating
(Source: TD Market research)
ZGQ Holdings
| Weight (%) | Name |
| 5,16% | MICROSOFT CORP |
| 5,00% | APPLE INC |
| 4,57% | FACEBOOK INC |
| 3,31% | TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD |
| 2,78% | JOHNSON & JOHNSON |
| 2,65% | ALPHABET INC |
| 2,59% | ALPHABET INC |
| 2,36% | VISA INC |
| 2,32% | NVIDIA CORP |
| 2,23% | TENCENT HOLDINGS LTD |
4) ZID – BMO India Equity Index
ZID Strategy and sector allocation
The BMO Indian Equity ETF provides exposure to the Indian market which is one of the most promising emerging markets. The fund acquires certificates (ADRs) from major Indian companies listed on the Toronto, London and New York stock exchanges (NYSE and NASDAQ).
ZID sector allocation – Top 3
45.20% Financial Services
20.62% Technology
14.39% Energy
ZID Holdings
| Weight (%) | Name |
| 15,64% | ICICI BANK LTD |
| 15,53% | INFOSYS LTD |
| 14,39% | RELIANCE INDUSTRIES LTD |
| 13,82% | HDFC BANK LTD |
| 8,50% | LARSEN & TOUBRO LTD |
| 8,02% | AXIS BANK LTD |
| 7,72% | STATE BANK OF INDIA |
| 3,92% | WIPRO LTD |
| 3,91% | MAHINDRA & MAHINDRA LTD |
| 3,01% | DR REDDY’S LABORATORIES LTD |
5) ZBK – BMO Equal Weight US Bank
ZBK STtrategy
The BMO Equal Weight US Banks ETF has been designed to replicate, to the extent possible, the performance of the Solactive Equal Weight US Bank Index, net of expenses. The Fund invests and holds the constituent securities of the index in the same proportion as that reflected in the index.
ZBK’s sector allocation is 100% in the financial sector.
ZBK Holdings
| Weight (%) | Name |
| 5,49% | WELLS FARGO & CO |
| 5,41% | AMERIPRISE FINANCIAL INC |
| 5,25% | BANK OF AMERICA CORP |
| 5,22% | US BANCORP |
| 5,16% | FIRST REPUBLIC BANK/CA |
| 5,15% | CITIZENS FINANCIAL GROUP INC |
| 5,08% | KEYCORP |
| 5,06% | FIFTH THIRD BANCORP |
| 5,04% | PNC FINANCIAL SERVICES GROUP INC/THE |
| 5,03% | REGIONS FINANCIAL CORP |
6) ZSP-U et ZSP – BMO S&P 500 Index ETF
ZSP Strategy
The BMO S&P 500 ETF seeks to replicate, to the extent possible, the performance of the S&P 500 Index, net of expenses. ZSP invests in the constituent securities of the index and holds these securities in a proportion equal to that which they represent in the index.
ZSP-U is a Canadian ETF however it only trades in US $.
ZSP is a Canadian ETF that trades in Canadian $ and is not hedged against currency risk.
ZSP-U vs ZSP which one to choose
If you are uncertain between a hedged, unhedged or US $ ETF, please refer to the table below:
Scenario 1: Value of Canadian $ appreciated | Scenario 2: Value of Canadian $ depreciated | |
| Non hedged ETF | Index return Minus foreign exchange loss | Index return Plus foreign exchange gains |
| Hedged ETF | Index return | Index return |
| US $ ETF | Index Return The investor chooses when to convert | Index Return The investor chooses when to convert |
S.P. 500 Index
The S&P 500 Index, or the Standard & Poor’s 500 Index, is a market-capitalization-weighted index of the 500 largest publicly-traded companies in the U.S.
The S&P 500 is an excellent index because most of its constituents are large established US corporations. It’s well diversified across various sectors of the US economy. The index is widely regarded as the best gauge of large-cap U.S. equities. It can be easily used to express an opinion on the US economy in general. In other words, if you are bullish on the performance of the American economy in the long term, it’s probably the best index for you.
ZSP-U Portefeuille
| Weight (%) | Name | Sector |
|---|---|---|
| 5.98% | APPLE INC | Information Technology |
| 5.54% | MICROSOFT CORP | Information Technology |
| 2.30% | AMAZON.COM INC | Consumer Discretionary |
| 1.73% | BERKSHIRE HATHAWAY INC | Financials |
| 1.63% | ALPHABET INC | Communication Services |
| 1.57% | UNITEDHEALTH GROUP INC | Health Care |
| 1.46% | JOHNSON & JOHNSON | Health Care |
| 1.45% | ALPHABET INC | Communication Services |
| 1.42% | EXXON MOBIL CORP | Energy |
| 1.23% | JPMORGAN CHASE & CO | Financials |
BMO investorline review
BMO Bank of Montreal offers a wide variety of different ETFs. It is in fact one of the largest issuers of exchange-traded funds in Canada. BMO’s brokerage service is offered under the BMO InvestorLine.
According to the Milliondollarjourney website, BMO investorline offers several advantages:
BMO investorline pros
• Best broker / bank;
• One of the best brokerage platform;
• App on phone is one of the best in the market;
• BMO is a major bank in Canada;
• Multiple resources to educate clients;
• Special offer when opening a new account (bonus up to $ 2,000). See link.
BMO investorline Cons
• Relatively high transaction costs compared to online brokers such as Questrade and Qtrade