Product Insights

BMO’s Top 6 low correlation ETFs

The benefit of adding lower correlation investments to your portfolio is a reduction in the volatility of the overall portfolio returns. A portfolio with lower variability of returns also tends to help you stay invested over the long run in different market environments.

Jul. 30, 2022
ZGD BMO Equal Weight Global Gold Index ETF
  • 38% correlation to Canadian markets (ZCN), 11% correlation to US markets (ZSP)
  • Equal weight basket of global gold mining companies
  • Gold is potentially a safe haven from market risk and an inflation hedge
ZPAY BMO Premium Yield ETF
  • 39% correlation to Canadian markets (ZCN), 80% Correlation to US markets (ZSP)
  • Alternative yield strategy with downside protection and ability to participate in some equity market growth
  • Dynamically shifts equity allocation to react to market movements while writing put and call options on high quality US equities
ZPR BMO Laddered Preferred Share Index ETF
  • 42% correlation to Canadian markets (ZCN), 30% correlation to US markets (ZSP)
  • Diversified portfolio of laddered Canadian rate reset preferred shares
  • Sharing some qualities with both equities and fixed income, preferred shares provide investors a differentiated source of return and a steady stream of income.
ZGI BMO Global Infrastructure Index ETF
  • 51% correlation to Canadian markets (ZCN), 53% correlation to US markets (ZSP)
  • North American listed global infrastructure companies
  • Infrastructure is generally non-cyclical, providing stable and predictable free cash flow
ZRE BMO Equal Weight REITs Index ETF
  • 58% correlation to Canadian markets (ZCN), 49% correlation to US markets (ZSP)
  • Equal weight basket of Canadian REITs
  • REITs offer differentiated revenue sources compared markets dominated by tech and new economy companies
ZINN BMO MSCI Innovation Index ETF
  • 61% correlation to Canadian markets (ZCN), 76% correlation to US markets (ZSP)
  • Captures growth from global themes investing in companies with exposure to autonomous technology & industrial, genomics, fin tech, and next generation internet
  • Selects companies and adjusts weights based on innovation themes, ZINN is benchmark agnostic

Source: Bloomberg, July 30 2022, Correlation over the two year period between July 2020 and July 2022 (ZINN correlation is since inception: Jan 20 2021). Correlation calculated in relation to US markets (ZSP – BMO S&P 500 Index ETF ) and Canadian markets (ZCN – BMO S&P/TSX Capped Composite Index ETF).

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.

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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