New BMO ETFs

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ockham
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Re: BMO Mid Corporate Bond Index ETF. versus BMO 2020 Corpor

Post by ockham »

AltaRed wrote:
ockham wrote:In order to replicate a strip, I would want to DRIP the interest payments. Problem is RBCDI (which is where I am) tells me that these BMO products aren't on their DRIP list, and BMO tells me they will DRIP but only if I'm at BMOIL.

Any suggestions???
No suggestions but why the need to be so precise with respect to replicating a strip ladder? Re-invest the income every few years, or when you have extra cash on a lump sum basis. DRIPs are an accounting nightmare outside registered accounts, and these days, with $10 commissions, DRIPs have lost most of their value.
This is a registered account, yes, wouldn't consider a strip/drip approach in an open account.

I accept your comment as a suggestion, actually. Suggestion being, relax need for precision on the target amount, and then sweep up interest payments as and when feasible, giving up some tidiness, for sure, and incurring some additional costs, but the spreads between provs/corps should still make it worthwhile.

Unless there are better ideas, probably what I'll do. Thank you.
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Re: New BMO ETFs

Post by ig17 »

BMO reduced fees on two ETFs
Effective on or about November 1, 2012, the maximum annual management fee for BMO S&P 500 Hedged to CAD Index ETF (ZUE) will be reduced by 31.8 per cent to 15bps and the maximum annual management fee for BMO Aggregate Bond Index ETF (ZAG) will be reduced by 28.6 per cent to 20bps.
In both cases, they matched the fees charged by Vanguard Canada on similar ETFs (VUS and VAB).

I have zero interest in ZUE and no immediate interest in ZAG, but I like the general trend. Thanks, Vanguard.
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Re: New BMO ETFs

Post by IdOp »

BMO has launched 4 new ETFs: Press Release.

Two of interest perhaps:

ZPR: BMO S&P/TSX Laddered Preferred Share Index ETF
- Though a rather Claymore-ish max. Mgt. Fee of 0.45% and MER of 0.51%

ZSP and ZSP.u: BMO S&P 500 Index ETF
- Unhedged and traded in both C$ and U$
- MER is 0.17%

I found the MER info here. Don't know much more about any of them yet.
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AltaRed
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Re: New BMO ETFs

Post by AltaRed »

ZSP.u might look interesting, especially for those who want to avoid US estate tax issues holding US domiciled ETFs and are not hung up on ~10 bp or so of costs.
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Shakespeare
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Re: New BMO ETFs

Post by Shakespeare »

Might it also be a candidate for Norbert's Gambit if the spreads are tight?
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Re: New BMO ETFs

Post by Bylo Selhi »

It's hard to see how all of these ETFs are going to grow large enough to be viable. There's going to have to be some culling of the herd in the next couple of years, especially given the low MERs. At an MER of 40bp, $100M in assets (e.g. ZDV) will generate $400k in fee revenue. Is that enough to be viable for a BMO-sized business?

Be careful that y'all aren't left standing with a significant capitals gains hit when the music stops ;)

Edit: to fix arithmetic error.
Last edited by Bylo Selhi on 20 Nov 2012 19:32, edited 1 time in total.
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AltaRed
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Re: New BMO ETFs

Post by AltaRed »

True but I think the 'broader' market ones will survive, especially a Cdn based USD one. That said, it will need some initial traction before I would consider taking the plunge.
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Re: New BMO ETFs

Post by IdOp »

Shakespeare wrote:Might it also be a candidate for Norbert's Gambit if the spreads are tight?
Probably, but I'd want to be convinced it was significantly cheaper than using DLR / DLR.u before using it for NG.
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Re: New BMO ETFs

Post by ig17 »

I have no doubt that some of these BMO ETFs will do just fine. Watch this:

BMO Canadian Equity ETF Fund (an index mutual fund)

AUM: 388M
MER: 1.05%

The fund has one holding: BMO S&P/TSX Capped Comp Index ETF. They don't mention the ticker, but it sounds very much like ZCN.

AUM: 907M
MER=0.15%

In effect, mutual fund holders subsidize the ETF.

Rinse & repeat across several asset classes, and you've got yourself a winning business.
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adrian2
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Re: New BMO ETFs

Post by adrian2 »

AltaRed wrote:ZSP.u might look interesting, especially for those who want to avoid US estate tax issues holding US domiciled ETFs and are not hung up on ~10 bp or so of costs.
A bad idea in an RRSP/RRIF due to the tax on US distributions (as opposed to a US-based ETF).
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Re: New BMO ETFs

Post by Springbok »

They were talking about ZPR on BNN. I was only 1/2 listening. They said that it used 100% rate resets as compared with an ishares equivalent that used 60% rate resets. Said the former should be a good choice to safeguard against rising interest rates, (should that ever happen).

What would be the downside of owning such an etf?

This is what Moneysense says about ZPR and the other new ETFs
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AltaRed
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Re: New BMO ETFs

Post by AltaRed »

adrian2 wrote:
AltaRed wrote:ZSP.u might look interesting, especially for those who want to avoid US estate tax issues holding US domiciled ETFs and are not hung up on ~10 bp or so of costs.
A bad idea in an RRSP/RRIF due to the tax on US distributions (as opposed to a US-based ETF).
A good point for those contemplating this in registered accounts, but not for myself (with negligible RRSP). Depending on how successful this one becomes, I may consider switching my Vanguard VTV holdings into this one a year from now.
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Re: New BMO ETFs

Post by Peculiar_Investor »

James also wrote up something, TXPL: New Preferred Share Index with ETF (ZPR) « PrefBlog and as usual has done more than just skim the surface. I'd suggest anyone considering ZPR should give James' article a thorough read.
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Re: New BMO ETFs

Post by ig17 »

AltaRed wrote:Depending on how successful this one becomes, I may consider switching my Vanguard VTV holdings into this one a year from now.
US value stocks performed poorly in the last decade. Chart VTV vs. SPY over 3, 5 and 7 years. You may want to wait for a value recovery before you switch.

A Recovery in Value Stocks Is Long Overdue
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AltaRed
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Re: New BMO ETFs

Post by AltaRed »

ig17 wrote:US value stocks performed poorly in the last decade. Chart VTV vs. SPY over 3, 5 and 7 years. You may want to wait for a value recovery before you switch.

A Recovery in Value Stocks Is Long Overdue
Don't I know it.....
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Re: New BMO ETFs

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Re: New BMO ETFs

Post by Lazy Ninja »

A quick question about ZCM. I was wondering if someone could explain about some of their specific holdings. There are a number of them (including the top three) that have maturity dates as far out as 2108. The maturity information (at the bottom of the page), shows no holdings with a duration of greater 10 years. I thought I remembered some discussion of similar securities elsewhere on the forum some time ago, but don't recall where.

What are these issues, and are they something I need to be worried about? Thanks in advance.
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Re: New BMO ETFs

Post by Lazy Ninja »

Apparently the holdings in question are fixed to floating rate bonds. Would I be correct in assuming they are included in ZCM because the fixed portion of the loan ends within 10 years? If so, I'm not quite sure I understand the length of the maturity. Why would the borrower want to assume the interest rate risk for an additional 85 years? Are these appropriate investments for a mid-term bond ETF?
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Re: New BMO ETFs

Post by queerasmoi »

I don't think they are appropriate for this ETF. Nonetheless I would assume that once a fixed/float bond becomes a floater, its pricing is no longer subject to interest rate fluctuations. Hence the pricing moves in a similar way as a bond that actually matures at that time.
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Re: New BMO ETFs

Post by Lazy Ninja »

Thanks for the reply QAM. I was contemplating adding to my position. Whenever I check similar ETFs, it always seems like ZCM has a better risk-reward ratio, so I figure there must be some additional risk I'm not seeing. Those long-dated maturities looked a little fishy to me. At any rate, I don't understand them very well, so I'll have to hold off on adding to my position until I can do some more research.
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Re: New BMO ETFs

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eezee
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Re: New BMO ETFs

Post by eezee »

Some MER's are footnoted that they exclude 'certain expenses'. I can't find what these expenses are. How/where do I find them ?
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eezee
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Re: New BMO ETFs

Post by eezee »

eezee wrote:Some MER's are footnoted that they exclude 'certain expenses'. I can't find what these expenses are. How/where do I find them ?
There have been quite a few views of my post but not one reply. Must have been a stupid question, yes?
I 'll try and rephrase the question.

The MER quotes for some funds has this footnote : " The MER for this fund excludes certain expenses, fees and taxes."

which means to me that the say .45% MER with this footnote could have a substantial amount added, who's to know.

I would be very surprised if you ETF gurus on this board would ignore such a 'pig in a poke' ...
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Shakespeare
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Re: New BMO ETFs

Post by Shakespeare »

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AltaRed
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Re: New BMO ETFs

Post by AltaRed »

For example, the BMO S&P TSX Capped Composite Index ETF MER is 0.17% and the TER is 0.00% for a total of 0.17%. Most broad based ETFs and index funds would have low TERs. It is the slice and dice boutique crap that one has to take a closer look at.
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