BMO’s Top U.S Equity ETFs
Jan. 30, 2024
With strong Q4 U.S earnings thus far, along with the U.S Federal Reserve expected to become more dovish, investors may want to consider allocating towards U.S ETFs as potential tailwinds have resurfaced.
BMO presents 6 ETFs to utilize to gain U.S equity exposure:
ZUQ/ZUQ.F/ZUQ.U - BMO MSCI USA High Quality Index ETF
- 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
ZNQ/ZQQ/ZNQ.U - BMO Nasdaq 100 Equity Index ETF/BMO Nasdaq 100 Equity Hedged to CAD Index ETF
- Exposure to a basket of the 100 largest non-financial listings on NASDAQ
- Known as the technology index, ~40 % allocation to the Magnificent 7 stocks, Facebook (Meta), Microsoft, Apple, Amazon, Google, Tesla, and NVIDIA
- The NASDAQ has rebounded off 2023 lows and has continued its resiliency into 2024
ZWT - BMO Covered Call Technology ETF
- Gain access to a diversified portfolio of large-cap North American information technology and technology-related companies with a covered all overlay to generate income
- Capitalizes on several emerging opportunities, including generative AI, cloud computing, and semiconductor growth
- 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
- Utilized to capture disruptive innovation that spans across different market capitalizations and sectors with low overlap to broad-market indices and 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
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 resilient indexes in the world with an excellent track record. ZSP has a return of 16.53% dating back to November of 2012
- With a 28% 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 U.S
ZSML/ZSML.F/ZSML.U - BMO S&P US Small Cap Index ETF
- With interest rates normalizing and the expectation for cuts from the Fed in 2024, smaller cap companies generally benefit more than the medium and large cap equities due to the nature of their balance sheets and profitability metrics
- Small cap companies often have more liabilities and carry higher interest costs to fund their day-to-day operations and invest in their business models for the future. As a result, when the central banks lower rates, the profitability potential of small cap companies will go up as interest expenses go down
- ZSML tracks the S&P SmallCap 600 Index which has a profitability criterion built in the stock inclusion process. The S&P SmallCap 600’s index criterion can potentially reduce volatility and enhance performance due to the stable nature of the companies within the index
*Performance:
| Fund Name | Ticker | YTD | 6 mo | 1 Year | 3 Year | 5 Year | Since Inception | Inception Date |
| BMO S&P 500 Index ETF | ZSP | 23.08% | 7.84% | 23.08% | 11.11% | 14.59% | 16.53% | 14-Nov-12 |
| BMO NASDAQ 100 Equity Hedged to CAD Index ETF | ZQQ | 52.37% | 10.19% | 52.37% | 8.57% | 20.46% | 16.70% | 19-Jan-10 |
| BMO MSCI USA High Quality Index ETF | ZUQ | 32.66% | 10.18% | 32.66% | 11.26% | 16.78% | 15.27% | 5-Nov-14 |
| BMO Covered Call Technology ETF | ZWT | 64.50% | 15.17% | 64.50% | - | - | 12.44% | 20-Jan-21 |
| BMO ARK Innovation Fund ETF Series | ARKK | 65.35% | 18.44% | 65.35% | - | - | 36.11% | 14-Nov-22 |
| BMO S&P US Small Cap Index ETF | ZSML | 13.02% | 9.32% | 13.02% | 8.17% | - | 7.91% | 5-Feb-20 |
*Source: BMO Bloomberg Dec 31st 2023.
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