We have embarked on a journey to explore ‘all’ of the exchange-traded funds (ETFs) created by the BMO Global Asset Management group. They have around 149 ETFs at the moment and the list keeps on growing. So, at least we will try to cover the most popular and best-performing ETFs in their portfolio. In this article, we talk about the BMO Monthly Income ETF, ticker symbol; ZMI.TO in the Toronto Stock Exchange (TSX).

BMO Global Asset Management (BMO GAM) is a family member of the Bank of Montreal, Canada’s first bank. The company holds a massive portfolio of exchange-traded funds (ETFs) that fit different investment goals of their customers. From low-risk funds to high-risks and from moderate incomes to high incomes, they have funds that fit all your investment needs. A smart investor will invest in a collection of these ETFs to manage risk and increase yield.

BMO Monthly Income ETF is a fund that focuses on short-term returns. It is designed to deliver the investors a steady stream of monthly passive income. To this end, ZMI holds some steady income generating sources such as bonds, and to yield premium incomes, it holds some high-yield equity. We will discuss these holdings at length later in this article.

According to BMO, ZMI is;

“designed to deliver the performance of an underlying basket of higher yielding BMO ETFs.
The holdings are weighted to emphasize yield.”

ZMI invest fully in a collection of other ETFs owned by BMO. This ensures that ZMI gets a high degree of diversification as well as keeping its Management Expense Ratio (MER) down.

Quick Facts	ZMI.TO
Fund inception date	January 28, 2011
Net Assets (Oct 8, 2021)	$112 million
Exchange	Toronto Stock Exchange
Annualized distributions yield	3.97%
Distribution frequency	Monthly
Management expense ratio	0.20%
Account eligibility	TSFA/RRSP/RESP/RRIF/DPSP

BMO rates ZMI in the low to medium risk category. This is quite respectable seeing that the fund yield almost 4% per annum.

BMO Monthly Income ETF (ZMI) Holdings

ZMI currently holds 8 ETFs in its portfolio along with a little bit of cash. However, all these ETFs are heavily diversified to focus on incomes.

Around 40% of the investments are focused on fixed incomes through sources such as government and corporate bonds. The balance of 60% is invested in stocks, which are also focused on returns.

Below is the complete holdings breakdown of ZMI as of October 12, 2021.

Holding Name	Weightage
BMO CORPORATE BOND INDEX ETF	24.02%
BMO US DIVIDEND ETF	18.71%
BMO GLOBAL HIGH DIVIDEND COVERED CALL ETF	14.77%
BMO CANADIAN DIVIDEND ETF	13.55%
BMO MID-TERM US IG CORPORATE BOND HEDGED TO CAD INDEX ETF	10.54%
BMO INTERNATIONAL DIVIDEND ETF	8.51%
BMO PREMIUM YIELD ETF	4.93%
BMO US PREFERRED SHARE HEDGED TO CAD INDEX ETF	4.81%
CASH	0.15%

The largest single holding in ZMI is on corporate bonds through BMO’s Corporate Bond Index ETF (ZCB.TO). This gives a steady source of income to the portfolio. This ETF holds over 700 different investments in bonds with different interest rates and maturities.

The second-highest weightage is on the BMO US Dividend ETF (ZDY.TO) which focuses on some of the largest and most reliable dividend-paying companies in the USA. Some examples of the companies held are Microsoft Corp., Apple Inc., Bank of America, Coca-Cola, Chevron, and more. This not only gives the investors of ZMI the exposure to the US market, but also allows to rely on some great dividend sources.

On the other hand, ZMI also holds Canadian dividend companies through the BMO Canadian Dividend ETF (ZDV.TO). Through this ETF, ZMI will enjoy distributions from amazing Canadian dividend payers such as Enbridge Inc., Royal Bank of Canada, CIBC, TD Bank, Bank of Montreal, Telus Corp., and more.

To counter the low but steady yields of government and coporate bonds, ZMI holds some high dividend payers in its portfolio. Together, these provide a well-balanced income source to the fund.

BMO Monthly Income ETF (ZMI) Performance

ZMI has been active for a decade now which gives us a good-enough period to evaluate the fund’s performance.

Since its inception until now, ZMI has given returns of around 78.4%. An investment of $10,000 in 2011 would have grown to about $17,840 by 2021. We can argue that these massive returns resonate well with the objective of this ETF which is to provide monthly returns to investors.

Is ZMI ETF for You?

Any investor looking to earn some steady monthly incomes, ZMI will be a great investment. It has a low management expense ratio and BMO rates the ETF as a low-medium risk. All these traits boil down to the fact that ZMI gives decently moderate yields every month while preserving your investment.

Check out the latest information about the fund on BMO.

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Disclosure: Any information given in this article is not to be construed as investment advice. You must do your own research before investing any money in the stock market. All investments carry inherent risks even with the possibility of losing all your money.