Last Fall, BMO expanded its lineup of ETFs by 9 new funds. Recently, BMO has once again added nine new ETFs to its lineup. They are:
BMO Mid Corporate Bond Index ETF (ZCM). MER: 0.30%
BMO Long Corporate Bond Index ETF (ZLC). MER: 0.30%
BMO Aggregate Bond Index ETF (ZAG). MER: 0.28%
BMO Global Infrastructure Index ETF (ZGI). MER: 0.55%
BMO China Equity Hedged to CAD ETF (ZCH). MER: 0.65%
BMO India Equity Hedged to CAD ETF (ZID). MER: 0.65%
BMO Equal Weight Utilities Index ETF (ZUT). MER: 0.55%
BMO Nasdaq 100 Equity Hedged to CAD Index ETF (ZQQ). MER: 0.35%
BMO Junior Gold Index ETF (ZJG). MER: 0.55%
Apart from the fixed-income ETFs, which track the DEX bond indices, and perhaps the infrastructure ETF, it is hard to see any of these new ETFs appealing to long-term, buy-and-hold type investors. ZAG, which tracks the broad Canadian bond market might be equivalent to the iShares CDN Bond Index Fund (XBB) but it fills a huge gap in BMO’s existing ETFs that track broad markets. The two corporate bond ETFs might appeal to fixed-income investors who want a little more yield in exchange for credit and interest rate risk but personally, I prefer to take risk with the equity portion of the portfolio especially since corporate bonds are highly correlated with stocks.
I’ve heard arguments that infrastructure is a separate asset class that merits its own allocation in a portfolio but it simply sounds like a fad to me. Besides, infrastructure stocks such as TransCanada (TSX: TRP) and Enbridge (TSX: ENB) are already part of the broad Canadian market.
You can confidently bet that the China and India ETFs will see a good uptake among the investing public because China and perhaps, India, are among the hottest BRIC markets. Still, it is worth asking: what investing rationale could there possibly be for adding exposure to American Depository Receipts from a single, far-away emerging market in one’s portfolio? Or to a single sector such as utility, technology or junior gold for that matter. The answer is not much but I won’t be surprised if these ETFs are popular with the speculating public.
You may also be interested in reading Jon Chevreau’s take on BMO’s new ETFs.
