New Listing

BMO follows Vanguard and lists model portfolio ETFs

David Tuckwell

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  • BMO is following in Vanguard Canada's footsteps and listing model portfolio ETFs.

  • The company is also listing four other products to add muscle to its product range.

BMO, Canada's second largest ETF provider by assets, is listing seven new ETFs on the Toronto Stock Exchange.

TickerFund NameManagement feeZBALBMO Balanced ETF0.18%ZCONBMO Conservative ETF0.18%ZGROBMO Growth ETF0.18%

The first three - ZBAL, ZCON, ZGRO - are model portfolio gambits. They invest in several underlying BMO index funds, the fees of which will be rebated. Like other model portfolio ETFs, the funds will provide asset allocations that corresponds to risk tolerance. Thus, the growth ETFs will be mostly in equities, while the conservative ETFs is mostly in bonds.

The funds will compete against model portfolio ETFs by Vanguard, whose products BMO appears to be mimicking, right down to the fund names and tickers.

TickerFund NameManagement feeAUM (M$CAD)VGROVanguard Growth ETF Portfolio0.22%585VBALVanguard Balanced ETF Portfolio0.22%403VCNSVanguard Conservative ETF Portfolio0.22%152

The ultra-low cost, together with the presence of Vanguard, suggest that model portfolio ETFs in Canada are becoming commoditised.

The other four new listings are somewhat dispersed.

TickerFund NameManagement feeZNQBMO NASDAQ 100 Equity Index ETF0.35%ZWKBMO Covered Call US Banks ETF0.65%ZUS/UBMO Ultra Short-Term US Bond ETFZHUBMO Equal Weight US Health Care Index ETF0.30%

The Nasdaq tracker will complement BMO's existing hedged product, which has more than $550M under management.

ZWK will invest in US banks (Canadian investors love banks, particularly their own) and sell call options on the bank holdings.

ZUS will invest in a portfolio of US bonds with shorter duration exposure, to ensure they're less interest rate sensitive.

While ZHU will invest in the extremely-well-performing US healthcare sector on an equal weight basis.

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