Strategy
Product Insights
Product Insights

BMO’s Top Snowbird ETFs

Attention snowbirds looking to diversify their portfolios outside of Canada

Sep. 6, 2023

Investors need to understand the potential withholding tax and U.S. estate tax implications on foreign investments. Wealthy Canadians looking for a place to invest their greenbacks but who are also concerned about U.S. estate taxes, might be better suited to invest in a Canadian-listed ETF or mutual fund. 

Canadian mutual funds and Canadian-listed ETFs (even if they invest in U.S. equity or debt securities), are generally not considered to be U.S. assets for estate tax purposes.

* BMO ETFs presents our top picks for snowbirds. The following ETFs offer: 

  • No U.S. Estate Tax Exposure
  • No T-1135 Foreign Income Verification form required
ZUS.U BMO Ultra Short-Term US Bond ETF (USD Units)
  • Investment-grade bonds with <1-year maturity, held until maturity
  • Low duration to mitigate risk of increasing interest rates
  • Keep capital protected against inflation, while minimizing market and price volatility
  • No lockup period and trades daily unlike traditional GICs
  • Objective: Income
ZPAY.U BMO Premium Yield ETF (USD Units)
  • Alternative defensive yield with downside protection and ability to participate in equity market growth
  • Dynamically shifts equity weight to react to market movements while writing put and call options on blue-chip, large-cap, U.S. equities
  • Objective: Income
ZWH.U BMO US High Dividend Covered Call ETF (USD Units)
  • Defensive exposure to U.S. high-dividend-paying equities, with a covered call overlay
  • Additional tax-efficient layer of income from covered calls^
  • Invests in sustainable dividend paying companies, while avoiding yield traps
  • by screening for historical growth rate, momentum, and sustainability of the dividends
  • Objective: Income
ZPR.U BMO Laddered Preferred Share Index ETF (USD Units)
  • Diversification to both traditional equities and bonds
  • Additional income over traditional fixed income
  • As interest rates continue to be volatile, the need for preferred shares to offset duration risk in a fixed income portfolio continues to be important
  • Objective: Income
ZMI.U BMO Monthly Income ETF (USD Units)
  • Balanced, income-focused asset allocation ETF
  • Simple, one-ticket, low-cost solution that rebalances automatically
  • Fund of Funds, no double dipping on fees
  • Objective: Income
ZWB.U BMO Covered Call Canadian Banks ETF (USD Units)
  • Defensive exposure to Canadian banks, with a covered call overlay
  • Additional tax-efficient layer of income from covered calls^
  • Invest in the strength of Canadian banks, and benefit from consistent and growing dividends
  • Objective: Income & Growth
ZSP.U BMO S&P 500 Index ETF (USD Units)
  • Access a diversified basket of the largest 500 companies in the U.S. with globally derived revenues
  • Growth sectors like Information Technology and Health Care are the leading weights
  • Tracks the securities of the largest and most liquid public companies in the U.S.
  • Objective: Growth
ZUQ.U BMO MSCI USA High Quality Index ETF (USD Units)
  • Holds companies with high return on equity, stable earnings and low financial leverage.
  • These high-quality blue-chip companies respond to positive market conditions and provide support in market contractions.
  • Rebalanced semi-annually and reconstituted annually to ensure the portfolio remains constructed with true market leaders
  • Objective: Growth

^As compared to an investment that generates an equivalent amount of interest income.

* As long as the Canadian funds are treated as corporations for U.S. tax purposes. This communication is for information purposes. The information contained herein is not, and should not be construed as, investment, tax or legal advice to any party. Investments should be evaluated relative to the individual’s investment objectives and professional advice should be obtained with respect to any circumstance The payment of distributions is not guaranteed and may fluctuate. ​“This material is for information purposes. The information contained herein is not, and should not be construed as, investment, tax or legal advice to any party. Particular investments and/​or trading strategies should be evaluated relative to the individual’s investment objectives and professional advice should be obtained with respect to any circumstance.

Distributions are not guaranteed and may fluctuate. Distribution rates may change without notice (up or down) depending on market conditions. The payment of distributions should not be confused with an investment fund’s performance, rate of return or yield. If distributions paid by an investment fund are greater than the performance of the fund, your original investment will shrink. Distributions paid as a result of capital gains realized by an investment fund, and income and dividends earned by an investment fund, are taxable in your hands in the year they are paid. Your adjusted cost base will be reduced by the amount of any returns of capital. If your adjusted cost base goes below zero, you will have to pay capital gains tax on the amount below zero. Please refer to the distribution policy for BMO ETF set out in the prospectus.

Cash distributions, if any, on units of a BMO ETF (other than accumulating units or units subject to a distribution reinvestment plan) are expected to be paid primarily out of dividends or distributions, and other income or gains, received by the BMO ETF less the expenses of the BMO ETF, but may also consist of non-taxable amounts including returns of capital, which may be paid in the manager’s sole discretion. To the extent that the expenses of a BMO ETF exceed the income generated by such BMO ETF in any given month, quarter or year, as the case may be, it is not expected that a monthly, quarterly, or annual distribution will be paid. Distributions, if any, in respect of the accumulating units of BMO Short Corporate Bond Index ETF, BMO Short Federal Bond Index ETF, BMO Short Provincial Bond Index ETF, BMO Ultra Short-Term Bond ETF and BMO Ultra Short-Term US Bond ETF will be automatically reinvested in additional accumulating units of the applicable BMO ETF. Following each distribution, the number of accumulating units of the applicable BMO ETF will be immediately consolidated so that the number of outstanding accumulating units of the applicable BMO ETF will be the same as the number of outstanding accumulating units before the distribution. Non-resident unitholders may have the number of securities reduced due to withholding tax. Certain BMO ETFs have adopted a distribution reinvestment plan, which provides that a unitholder may elect to automatically reinvest all cash distributions paid on units held by that unitholder in additional units of the applicable BMO ETF in accordance with the terms of the distribution reinvestment plan. For further information, see Distribution Policy in the BMO ETFs’ prospectus.

The Index is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”), and has been licensed for use by the Manager. S&P®, S&P 500®, US 500, The 500, iBoxx®, iTraxx® and CDX® are trademarks of S&P Global, Inc. or its affiliates (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”), and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by the Manager. The ETF is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the Index. 

The ETF referred to herein is not sponsored, endorsed, or promoted by MSCI and MSCI bears no liability with respect to the ETF or any index on which such ETF is based. The ETF’s prospectus contains a more detailed description of the limited relationship MSCI has with the Manager and any related ETF.”

Commissions, management fees and expenses (if applicable) all may be associated with investments in exchange traded funds. Please read the ETF Facts or prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all dividends or distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Exchange traded funds are not guaranteed, their values change frequently and past performance may not be repeated. 

For a summary of the risks of an investment in the BMO ETFs, please see the specific risks set out in the prospectus. BMO ETFs trade like stocks, fluctuate in market value and may trade at a discount to their net asset value, which may increase the risk of loss. Distributions are not guaranteed and are subject to change and/​or elimination. BMO ETFs are managed by BMO Asset Management Inc., which is an investment fund manager and a portfolio manager, and a separate legal entity from Bank of Montreal. 

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