BMO Growth ETF (ZGRO) Review
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 Growth ETF, ticker symbol; ZGRO.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 Growth ETF is one of BMO’s most famous growth-oriented funds. Investors looking to set aside their money for the long run can rely on this fund to grow their wealth through strategic investments sprinkled with a quarterly distribution as well.
According to BMO, ZGRO is;
“designed to provide long-term capital appreciation by investing in global equity and fixed income ETFs.”
ZGRO invests in a bunch of other ETFs owned by BMO, thus the diversification is pretty massive. Another major benefit of this is that BMO is able to keep the Management Expense Ratio of ZGRO to a minimum.
| Quick Facts | ZGRO.TO |
|---|---|
| Fund inception date | February 15, 2019 |
| Net Assets (Oct 8, 2021) | $125 million |
| Exchange | Toronto Stock Exchange |
| Annualized distributions yield | 2.33% |
| Distribution frequency | Quarterly |
| Management expense ratio | 0.20% |
| Account eligibility | TSFA/RRSP/RESP/RRIF/DPSP |
Some interesting features of ZGRO are that it focuses a lot on emerging markets, small-cap, and medium-cap companies. We can argue that these markets possess the greatest growth potential. However, they also possess significant risks as well. To counter this, ZGRO holds very steady investments such as government bonds and index funds such as S&P 500 index and TSX index. This balance is what essentially makes this ETF a relatively secure investment. These traits are quite similar to that of BMO’s ZBAL ETF that focuses on balanced growth and income. However, the weights of holdings are altered to match ETF’s investment objectives.
BMO rates the ZGRO ETF at the low to medium risk category.
BMO Growth ETF (ZGRO) Holdings
ZGRO only holds 9 ETFs and a little bit of cash in its portfolio. This may not look like much diversification until we examine the holding of the ETFs it holds. Below are all the holdings of ZGRO as of October 8, 2021.
| Holding Name | Weightage |
|---|---|
| BMO S&P 500 INDEX ETF | 32.93% |
| BMO S&P/TSX CAPPED COMPOSITE INDEX ETF | 20.80% |
| BMO MSCI EAFE INDEX ETF | 16.91% |
| BMO AGGREGATE BOND INDEX ETF | 13.65% |
| BMO MSCI EMERGING MARKETS INDEX ETF | 7.03% |
| BMO GOVERNMENT BOND INDEX ETF | 3.71% |
| BMO S&P US MID CAP INDEX ETF | 2.05% |
| BMO MID-TERM US IG CORPORATE BOND HEDGED TO CAD INDEX ETF | 2.02% |
| BMO S&P US SMALL CAP INDEX ETF | 0.91% |
| CASH | -0.01% |
The largest weight is given to BMO’s S&P 500 Index ETF that attempts to replicate the US S&P 500 index, which tracks 500 of the largest companies in the US stock market. BMO holds the same companies in equal weights as the S&P 500 index does. This index is supposed to be one of the best ‘fail-safe’ investments out there.
Almost 17% of the ZGRO ETF is held in developed equity markets around the world, except for the USA and Canada. What this does is that it allows the investors the exposure in the best of global economies, since the USA is already covered with their S&P 500 Index ETF, and Canada is covered through the S&P/TSX Capped Composite Index ETF.
However, developed markets such as the USA, Canada, China, Singapore, etc., grow slow. So, ZGRO wants to balance this off with some accelerated growth markets. To this end, ZGRO also holds its own MSCI Emerging Markets Index ETF. Emerging markets could present investors with high-growth opportunities in a shorter time span.
All-in-all, ZGRO ETF has a good mix of stable growth and accelerated growth investments.
BMO Growth ETF (ZGRO) Performance
ZGRO ETF is quite new. It was created in February 2019, which means it has only had 2 years of performance track record, which is barely any time for a long-term investment portfolio. Regardless, this ETF has seen some significant growth over the past two years.
An investment of $10,000 in ZGRO ETF at the beginning of the fund would have grown to $13,345 by today. This is an impressive total return of 13.35% in a little over two and half years.
Is ZGRO ETF for You?
As BMO suggests, ZGRO is an ETF for the long run. If you have a few decades of investment timeframe ahead of you, this might be a big winner for you. While most of the stable holdings will give some solid footing, other accelerated investments could give you some good returns on the way. The true test of the performance of this fund is yet to come.
Check out the latest information about the fund on BMO.
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.
