Canadian model portfolio ETFs get commoditised


BMO follows Vanguard and lists model portfolio ETFs

BMO, Canada’s second largest ETF provider by assets, is listing seven new ETFs on the Toronto Stock Exchange.

Ticker Fund Name Management fee
ZBAL BMO Balanced ETF 0.18%
ZCON BMO Conservative ETF 0.18%
ZGRO BMO Growth ETF 0.18%

The first three – ZBAL, ZCON, ZGRO – are model portfolio gambits. They invest in several underlying BMO index funds, the fees of which will be rebated. Like other model portfolio ETFs, the funds will provide asset allocations that corresponds to risk tolerance. Thus, the growth ETFs will be mostly in equities, while the conservative ETFs is mostly in bonds.

The funds will compete against model portfolio ETFs by Vanguard, whose products BMO appears to be mimicking, right down to the fund names and tickers.

Ticker Fund Name Management fee AUM (M$CAD)
VGRO Vanguard Growth ETF Portfolio 0.22% 585
VBAL Vanguard Balanced ETF Portfolio 0.22% 403
VCNS Vanguard Conservative ETF Portfolio 0.22% 152

The ultra-low cost, together with the presence of Vanguard, suggest that model portfolio ETFs in Canada are becoming commoditised.

The other four new listings are somewhat dispersed.

Ticker Fund Name Management fee
ZNQ BMO NASDAQ 100 Equity Index ETF 0.35%
ZWK BMO Covered Call US Banks ETF 0.65%
ZUS/U BMO Ultra Short-Term US Bond ETF
ZHU BMO Equal Weight US Health Care Index ETF 0.30%

The Nasdaq tracker will complement BMO’s existing hedged product, which has more than $550M under management.

ZWK will invest in US banks (Canadian investors love banks, particularly their own) and sell call options on the bank holdings.

ZUS will invest in a portfolio of US bonds with shorter duration exposure, to ensure they’re less interest rate sensitive.

While ZHU will invest in the extremely-well-performing US healthcare sector on an equal weight basis.

Invesco targets USD version of EPAC low volatility fund

Invesco is listing a US dollar denominated version of its EPAC low volatility fund. Low volatility ETFs currently make up a large portion of its product offering in Canada.

Ticker Fund Name AUM (M$CAD)
TLV Invesco S&P/TSX Composite Low Volatility Index ETF 341.6
ULV.C Invesco S&P 500 Low Volatility Index ETF 244.6
PLV Invesco Low Volatility Portfolio ETF 43.4
ILV Invesco S&P International Developed Low Volatility Index ETF 32.4
ELV Invesco S&P Emerging Markets Low Volatility Index ETF 20.7
UHD Invesco S&P 500 High Dividend Low Volatility Index ETF 19.2
GHD Invesco S&P Global ex. Canada High Dividend Low Volatility Index ETF 16.7

The Invesco S&P International Developed Low Volatility Index ETF (ILV/F), will invest in the 200 least volatile large- and mid-cap stocks in developed markets within Europe and Asia Pacific, excluding Korea.

The fund charges 0.35%.