Strategy

Top 6 U.S Equity ETF Ideas

May 7, 2024

With earning season well under way, most companies have exceeded expectations and have returned positive results this quarter. Moreover, last week the Fed had signaled that the next move is most likely a rate cut, that a rate increase is highly unlikely, which has created a positive sentiment for investors. Although inflation remains to be stubborn, rate cuts aren’t completely off the table in 2024 as the market still sees at least 1 rate cut this year. At this point, many believe that the most prudent approach for investors is to not take their eye off the ball and remain invested in a well diversified quality solution. 

BMO presents 6 ETFs to utilize to gain U.S equity exposure:

ZSP/ZUE/ZSP.U - BMO S&P 500 Index ETF

  • Utilized as a core building block to a portfolio and is one of the largest most liquid ETFs in Canada *
  • The S&P 500 is considered one of the most cost efficient and resilient indexes in the world with an excellent track record
  • With a 30% allocation to the Technology sector, investors can capitalize on innovation stocks in the U.S with the diversification support of the largest companies in the world

ZUQ/ZUQ.F/ZUQ.U - BMO MSCI USA High Quality Index ETF

  • This core solution provides exposure to high-quality growth companies — defined as market leaders with durable business models and sustainable competitive advantages
  • A well-diversified basket of blue-chip companies with the potential for greater long-term growth and less volatility than the broad market over time
  • Companies typically have high return on equity (ROE), stable earnings across changing business cycles, and strong balance sheets with low financial leverage

ZLU/ZLU.U/ZLH BMO Low Volatility US Equity ETF ZLU / U.S Dollar Units / Hedged to CAD

  • Well diversified solution that uses beta as the primary investment selection and weighting criteria. Low beta investments are less volatile than the broad market and can be considered defensive investments
  • Over the long-term, low beta stocks may benefit from smaller declines during market corrections and still increase during advancing markets providing the potential for stable and predictable returns
  • Low beta stocks tend to be more mature and provide higher dividend yield than the broad market that can act as a cushion to market fluctuations when reinvested*

ZNQ/ZQQ/ZNQ.U - BMO Nasdaq 100 Equity Index ETF/BMO Nasdaq 100 Equity Hedged to CAD Index ETF

  • An excellent addition to a core portfolio with exposure to a basket of the 100 largest non-financial listings on the NASDAQ
  • The index is led by mature companies with a proven track record of growing earnings, well-capitalized balance sheets and compelling competitive advantages
  • Consider the Nasdaq 100 Index for global diversification as this U.S. index receives approximately 43% of its sales from international sources of revenue overseas*

ZWT - BMO Covered Call Technology ETF

  • Add alpha and income to your portfolio and gain access to a diversified basket of large-cap North American Information Technology/​Technology-related companies with a covered all overlay to generate additional yield
  • Capitalizes on several emerging opportunities, including generative AI, cloud computing, and semiconductor growth
  • This portfolio provides emphasis on high-quality, large-cap technology names to enhance the overall stability and risk profile of the ETF while still providing an attractive yield boost relative to the technology index

ARKK - BMO ARK Innovation Fund ETF Series

  • A satellite position for long term growth used to capture disruptive innovation ideas that span across different market capitalizations and sectors with low overlap to broad-market indices to further diversify your portfolio
  • Invests in five major innovation platforms that are evolving and converging at the same time: Artificial Intelligence, Energy Storage, Robotics, DNA Sequencing, and Blockchain Technology
  • Actively managed by Ark Invest’s founder and Chief Investment Officer, Cathie Wood, trades in CAD dollars over the TSX

*Performance:

Fund Name

Ticker

YTD (%)

6 month (%)

1 Year (%)

3 Year (%)

5 Year (%)

Since
Inception (%)

Inception
Date

BMO S&P 500 Index ETF

ZSP

10.08

19.86

24.18

11.85

13.42

16.99

14-Nov-12

BMO MSCI USA High
Quality Index ETF

ZUQ

12.00

21.59

31.95

13.77

15.26

16.08

5-Nov-14

BMO Low Volatility
US Equity ETF

ZLU

7.49

9.96

2.78

8.77

8.48

13.43

19-Mar-19

BMO NASDAQ 100 Equity
Hedged to CAD Index ETF

ZQQ

3.53

20.43

30.50

7.26

16.52

17.02

19-Jan-10

BMO Covered Call
Technology ETF

ZWT

14.69

27.82

50.92

15.27

-

15.66

20-Jan-21

BMO ARK Innovation
Fund ETF Series

ARKK

-13.80

22.58

22.86

-

-

14.52

14-Nov-22

*Source: BMO Bloomberg April 302024.

Disclosures:

Advisor Use Only. 

The 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. 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.

Any statement that necessarily depends on future events may be a forward-looking statement. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Although such statements are based on assumptions that are believed to be reasonable, there can be no assurance that actual results will not differ materially from expectations. Investors are cautioned not to rely unduly on any forward-looking statements. In connection with any forward-looking statements, investors should carefully consider the areas of risk described in the most recent simplified prospectus.

Commissions, management fees and expenses all may be associated with investments in exchange traded funds. Please read the ETF Facts or prospectus of the BMO ETFs 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 BMO ETF’s 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. 

The BMO ETFs or securities referred to herein are not sponsored, endorsed or promoted by MSCI Inc. (“MSCI”), and MSCI bears no liability with respect to any such BMO ETFs or securities or any index on which such BMO ETFs or securities are based. The prospectus of the BMO ETFs contains a more detailed description of the limited relationship MSCI has with BMO Asset Management Inc. and any related BMO ETFs.

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