BMO ETF Spotlight - More than Just a Bank

A company does not survive for 200+ years without being at the forefront of innovation, and a testament to BMO’s innovation has been their foray into the ETF space.

ETF roster – biggest in the country

As of February 23, BMO’s asset manager subsidiary, BMO Global Asset Management has one of the largest rosters of ETFs in Canada with 176 ETF offerings. This is surprising given that BlackRock—the largest asset manager in the entire world by assets—only has ~160 ETF offerings within Canada under its iShares banner.

BMO has ETF listings for all seasons, including exposures to different asset classes, sub-asset classes, strategies, structures and regions. Investors can browse through their offerings on NEO’s ETF Screener, where they can filter for different themes, asset classes, geographies and sectors.

BMO’s ETF strategy

BMO entered the Canadian ETF market on May 29, 2009, with the launch of 4 ETFs:

1. BMO S&P/TSX Capped Composite Index ETF (ZCN)
2. BMO S&P 500 Index ETF (ZUE)
3. BMO Mid Federal Bond Index ETF (ZFM)
4. BMO Dow Jones Industrial Average Index ETF (ZDJ)

These ETFs marked BMO’s move into the retail ETF space by offering Canadians a low-cost and easily accessible way to invest in some of the most popular U.S. indexes such as the S&P 500 Index and Dow Jones Industrial Average, in addition to the opportunity to invest in Canadian stocks and bonds.

Since then, BMO has significantly grown their ETF roster, offering all sorts of strategies and asset classes to its growing base. As of the end of January 2023, BMO has amassed more than $90 billion of assets under management (AUM) in its ETFs.

For ETF issuers, scale is critical. No other home-grown Canadian ETF issuer has even come close to matching BMO’s growth. The other two largest competitors within Canada are BlackRock (NYSE:BLK) and Vanguard—both of which have massive scale outside of Canada.

The reason that scale is important is that it drives economies of scale and helps develop a strong brand, which ultimately supports cross-selling opportunities and AUM retention throughout the cycle.

As a simple example, when the economy is in a recession, investors may pivot out of Equity ETFs into Fixed-Income ETFs. Given BMO’s sizable footprint in both, they’re unlikely to lose AUM given that investors could simply switch to one of their other low-cost offerings.

Why does this matter? Being a top ETF provider means that BMO has reached critical mass within Canada, enabling them to offer a wide variety of ETFs in a cost-efficient manner given their ability to pass on cost savings to investors. Alternative benefits include greater liquidity in their ETF offerings, which allow their investors to be comfortable entering/exiting positions in BMO’s ETFs.

Top ETFs by BMO

As mentioned, BMO has some of the largest, most liquid, and cheapest ETFs within Canada. Some highlights include the following:

BMO S&P 500 Index ETF (ZSP)

ZSP is BMO’s largest ETF offering, and of course it’s in the most popular index in the entire world—the S&P 500 Index, which provides exposure to 500 of the most successful publicly-listed companies in the U.S. to Canadian investors.

• AUM: $9.38 billion
• Expense Ratio: 0.09%
• 3mo Returns: -+3.88%

BMO S&P/TSX Capped Composite Index ETF (ZCN)

As part of BMO’s original four offerings in 2009, ZCN has risen to become one of BMO’s staple offerings. Allowing Canadian investors to gain exposure to the S&P/TSX Index—an index of the most successful publicly-listed Canadian companies.

• AUM: $6.65 billion
• Expense Ratio: 0.06%
• 3mo Returns: +2.49%

BMO Aggregate Bond Index ETF (ZAG)

One of the top bond ETFs in Canada (and certainly one of the most cost-effective), ZAG offers Canadian investors broad-based exposure to bond investments with differing maturities; offering a balanced duration exposure.

• AUM: $6.32 billion
• Expense Ratio: 0.09%
• 3mo Returns: +1.12%

Data as of March 20, 2023.

This content was originally published by our partners at the Canadian ETF Marketplace.