BMO Monthly Income ETF - ZMI

ETF Overview

The fund has been designed to deliver the performance of the underlying basket of higher yielding BMO ETFs. ETFs are selected by having a higher yield than either the equity market represented by the BMO S&P/TSX Capped Composite Index ETF (ZCN) or the fixed income market represented by the BMO Aggregate Bond Index ETF (ZAG).

The holdings are weighted by yield, with 50 percent investment in each of equity and fixed income and a cap of 20 percent for each security.

The ETF is rebalanced and reconstituted semi-annually in July and January.

In addition, as ZMI is a fund of fund, the management fees charged are reduced by those accrued in the underlying funds.

Key ETF Data

Fundamentals
Category (main)	Global (mostly Canada & USA) Equity Income & Fixed Income - Corporate (investment grade & non-investment grade)
Category (other)	Multi-asset class / Fund of Funds
Underlying Index	No Index
ETF Structure	Active management. No index
Asset Class	Equity Income & Fixed Income - Corporate (investment grade & non-investment grade)
Region	Global (mostly Canada & USA)
Issuer	BMO
ETF Home Page	Available here

Fund Facts
Inception Date	Jan 28, 2011
Total Holdings	15 *
Distribution Frequency	Monthly
Leverage	None
Significant Currency Exposure	No
Currency Hedging	Not applicable

* Fund of funds

Fees
Management Fee	0.55%
Management Expense Ratio (MER)	0.63%

Trading Information
Ticker	ZMI
Exchange	TSX (Toronto Stock Exchange)
Currency	CAD

Eligibility
Eligibility *	RRSP, RRIF, RESP, TFSA, DPSP, RDSP
DRIP available **	Yes
PACC Plan available **	Unknown
SWP available **	Unknown

* Always check eligibility with your plan operator as plans and accounts can differ

** Not all brokers can facilitate these plans. Check with your broker.

Current Price, Fund Performance, Yield, NAV, Charts etc

To view the TSX or Morningstar fund page for this ETF click on the Fund Data menu tab or below:

ETF Analysis

Bonds/fixed income funds should be an important component in most investment portfolios. The general rule of thumb is that you should have the percentage equivalent in bonds as per your age. So if you are 30, your portfolio should comprise 30% bonds/fixed income funds.

However the bond markets are in near unprecedented territory. Years of central bank stimulus packages and ultra-low interest rates since 2008's Financial crisis have created a massive bubble.

Many analysts including Peter Boockvar, managing director and chief market analyst at The Lindsey Group, agree. He stated in July 2016 that the bond market is in an ‘epic bubble of colossal proportions’.

Until the buddle bursts, we cannot recommend buying bonds/fixed income funds.

If you absolutely have to buy bonds/fixed income funds then ensure you always check the Yield To Maturity (YTM), also known as the Weighted Average Yield To Maturity.

The YTM is much more important than the bond's current yield (also called the current distribution yield).

The YTM (unlike current yield) considers not only the coupon income, but any capital gain or loss that an investor will realize by holding the bonds to maturity. It also considers reinvestment of the coupons.

Unfortunately the frothy bond market has meant many fixed income ETFs have had to purchase many bonds at a premium. An ultra-low rate environment and purchasing bonds at a premium makes for a particularly terrible climate for income seekers, and new fixed income investors.

Protect yourself by understanding YTM and checking the YTM of any fixed income security you are considering purchasing. Also understand quality ratings, duration and maturities.

Be particularly aware of fund fees. What is the fund's MER ()? An MER of 0.40% may not sound like much but fixed income funds are supposed to be less risky than equities (bond market bubbles such as the current one excepted) so their returns are typically considerably less. Consequently an MER of 0.40% may actually be a significant portion of any investment return from a bond/fixed income fund. Bond ETFs with sub 0.20% MERs are available.