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  5. ZAG: Hi Would you have a recommendation for a bond ETF from BMO? [BMO Aggregate Bond Index ETF]
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Q: Hi

Would you have a recommendation for a bond ETF from BMO? I have no bond exposure now and I'm looking to start acquiring one or more bond ETFs - whatever you think might be a good mix considering all the relevant factors.

My brokerage is through BMOInvestorline so there is no trading commission if I use their products.

Thanks so much
Robert

Asked by Robert on February 15, 2022
5i Research Answer:

The BMO Aggregate Bond Index (ZAG) is one of BMO's most liquid bond ETFs, and it invests in a variety of bonds with maturities greater than one year. AUM is $6.02B, MER is 0.09%, and its distribution yield is 3.18%. It is liquid, has good diversification, stability, and a good yield, but more than half of its holdings are long-term bonds, which will be more sensitive to movements in interest rates. 

Bonds with shorter maturities will be less sensitive to interest rate movements, and the BMO Short-Term Bond ETF (ZSB) is a good alternative. Its downsides are that it has a low AUM of $86.7M, but its MER is 0.10%, its distribution yield is 2.45%, and focuses on short-term bonds (around 3 years).