ZGRO Review: BMO ETF Growth Portfolio Explained

ZGRO Review Rating: 4.7/5

[stock-market-overview stockExchange=”TSX” width=”100%” title=”ZGRO Stock Real-Time Marketing Performance” equities=”ZGRO” currencies=”USD/CAD” allowSort=”true” includeChart=”true” logoMaxHeight=”20px” logoMaxWidth=”90px” height=”100%” culture=”English-Canada”]

The path to financial freedom may seem overwhelming, time-consuming and skeptical, but it need not be.

By identifying and investing in the right investment vehicle, you’re halfway to the land of financial freedom.

So how do you get there? It’s not as difficult as it may seem.

Based on my over 2-year experience, I can confidently say that the secret lies in exchange-traded funds (ETFs).

Exchanged-traded funds are undoubtedly the revolution of investment not only in Canada but the world over.

Specifically, all-in-one ETFs such as ZGRO, are more popular because of their low cost, easy access and simplicity compared to traditional mutual funds.

To extend my positive experience of ZGRO ETF with you, I decided to write this comprehensive ZGRO review that explores not only the good part of ZGRO but its ugly part as well.

Hopefully, at the end of this ZGRO review, you should be able to make an informed decision on whether or not ZGRO ETF is right for you.

Let’s get started!

BMO Growth ETF (ZGRO): A Brief Overview

BMO Growth ETF (ZGRO) is one of four all-in-one ETFs of the Bank of Montreal (BMO) ETF Portfolios that were launched on Feb 15, 2019.

With more than 130 ETFs, BMO gives investors the flexibility they need to stay on top of their investment in Canada, depending on their financial objectives and risk tolerance.

Of the four all-in-one ETFs of BMO, only ZGRO has more allocation on equity and less on fixed come (bonds).

ETFAsset Allocation
BMO Growth ETF (ZGRO)80% equity and 20% bonds
BMO Balanced ETF (ZBAL)60% equity and 40% bonds
BMO Conservative ETF (ZCON)60% bonds and 40% equity
BMO Balanced ESG ETF (ZESG)60% equity and 40% bonds

Source: www.bmo.com

What is ZGRO?

BMO Growth ETF (ZGRO) is an all-in-one ETF portfolio that provides long-term capital growth to investors through equity and fixed-income allocations.

As a fund of funds, ZGRO management fees (0.18%) are limited by the expenses incurred through the underlying.

As you continue reading, you will learn more about what ZGRO entails and why it’s different from other all-in-one ETFs.

ZGRO Objective and Portfolio Strategy

The objective of BMO Growth ETF (ZGRO) is to provide investors with long-term capital growth.

ZGRO aims to achieve that by investing in international equity and fixed income exchange-traded funds.

Quarterly, the ZGRO is expected to rebalance with the asset allocation weights of strategic indexes.

The ETF invests in ETFs that monitor large indices of stocks and bonds to achieve its objective.

Who Can Buy the ZGRO ETF?

ZGRO ETF is not restricted to a specific class of investors in Canada. While everyone is guaranteed to buy this ETF, it’s, however, more suitable for:

  • Investors looking for long-term capital growth.
  • Those who want global exposure to a diversified portfolio of fixed income and equity ETFs.
  • Those looking for a moderate income.

As you continue reading, you will learn more on how to determine whether or not to buy ZGRO ETF.

ZGRO Key Facts

As of May 18, 2021, the following are the top facts about ZGRO:

  • Minimum Investment: $ 36.39
  • Annual Management Fee: 18%
  • Management Expense Ratio (MER): 20%
  • Asset Allocation: 80% equity and 20% fixed income
  • Annual Distribution Yield: 2.4%
  • Dividend Frequency: Quarterly

I will interpret the meaning of these facts shortly in the course of this review.

ZGRO Stock: The Good and The Ugly

Just like another all-in-one ETFs out there, ZGRO has its good and ugly sides. What are they?

The following are the pros and cons of ZGRO ETF:

ZGRO Pros

  • Automatic rebalancing
  • Low fund management fee
  • Low MER
  • Diversified portfolio
  • Ease of use

ZGRO Cons

  • Low returns compared to other ETFs.
  • More inclined to the Canadian market.

As you can see, the good side of ZGRO overrides its ugly side, which makes it one of the best ETFs in Canada. But that’s enough to make a decision. Let’s dip down to it.

ZGRO Asset Allocation

ZGRO has the following asset allocation:

  • Stock: 80.65%
  • Fixed Income:31%
  • Cash and Cash Equivalents: 0.05%

Each of the above asset allocations responds differently to the market changes and economic activities based on their distinct characteristics.

By so doing, they all work together to provide investors with the perfect combination of risk, security, yield, and growth with a diversified portfolio.

ZGRO Holdings

As of May 18, 2021, ZGRO has ten BMO ETFs, which are:

Weight (%)ETF
0.05%CASH
0.90%BMO S&P US SMALL CAP INDEX ETF
1.84%BMO MID-TERM US IG CORPORATE BOND HEDGED TO CAD INDEX ETF
2.07%BMO S&P US MID CAP INDEX ETF
3.88%BMO GOVERNMENT BOND INDEX ETF
7.34%BMO MSCI EMERGING MARKETS INDEX ETF
13.58%BMO AGGREGATE BOND INDEX ETF
17.72%BMO MSCI EAFE INDEX ETF
21.17%BMO S&P/TSX CAPPED COMPOSITE INDEX ETF
31.44%BMO S&P 500 INDEX ETF

Source: www.bmo.com

The above ETFs offer global diversification through investing in Canadian, the US and other foreign stocks and bonds.

Let’s take a broader view of ZGRO geographic allocation.

ZGRO Geographic Allocation

As of May 18, 2021, ZGRO has the following geographic allocation:

CountryAllocation (%)
Canada37.9%
United States31.7%
Japan4.44%
China2.9%
United Kingdom2.21%
France1.97%
Switzerland1.73%
Germany1.7%
Australia1.43%
Taiwan1.1%
South Korea1.06%
Other 11.82%,

Source: www.bmo.com

Let’s look at the return of ZGRO right from inception.

ZGRO Return/Performance

As a new ETF in the market,  the historical performance of ZGRO is limited. However, as of April 30, 2021, it has 28.27% cumulative performance since inception.

ZGRO Performance

Source: www.bmo.com

It is important to note that even though an investment asset’s history performance can provide insight into its potential, it is just one of many factors to consider.

What I do when looking for a proper view on the performance of an ETF is to explore the constituent of the ETFs and examine their overall performance.

ZGRO Fees

When it comes to fees, ZGRO is a top alternative compared to mutual funds. Here are the two major fees of the ETFs:

  • Annual Management Fee: 18%
  • Management Expense Ratio (MER): 20%

With this low management and MER fee, you have the potential of investing more and yielding more returns. I am a living witness.

My ZGRO Review 5-Star Rating

Here are the factors I consider when rating ZGRO 4.7 out of five stars:

FeatureRating
Minimum Investment**** (4.1)
Annual Management Fee***** (4.8)
Management Expense Ratio (MER)*****
Asset Allocation**** (4.7)
Annual Distribution Yield***

Is ZGRO ETF Right for You?: #3 Factors to Consider

If you follow this review critically, now you should be asking yourself whether or not ZGRO ETF is right for you. The truth is, you’re the only one to answer this question perfectly.

Even though it can be difficult to make a decision, here are three major factors that I believe will help you answer this question based on your situation.

#1. Know Your Investment Objective

An investment objective is a reason why you make investments. Ask yourself, “is my investment objective align with the investment vehicle?”

As discussed earlier, the investment objective of ZGRO is to help investors attain long-term capital growth by investing in equity and bonds.

If your investment objective is more or less than the ZGRO objective, then you may need to consider other investment vehicles.

#2. Consider Your Risk Tolerance

As with any investment, you need to consider your level of risk tolerance before buying ZGRO.

It’s important to suit your investment objective with your risk tolerance, which will help you avoid getting burned in the event of a failure.

ZGRO has a low to medium risk level, so if this falls within your risk tolerance, then you’re good to go.

#3. Consider Your Time Horizon

Another important factor to consider before buying ZGRO is your investment time horizon.

Are you investing in a short-term goal? A medium-term goal? Or a long-term investment goal?

ZGRO is a long-term investment vehicle. This implies that you need to have a long-term horizon to benefits from it.

How to Buy ZGRO ETF

Once you’ve confirmed that your investment objective, risk tolerance and time horizon align with ZGRO, you can safely buy the ETF.

So how do you go about buying ZGRO ETF? You have two major options: whether to Do-it-Yourself or consult a Robo-advisor.

If you want to DIY, you need to open an account with one of the zero-commission online brokerages such as Wealthsimple Trade and Questrade.

By opening a Wealthsimple Trade account, you can trade thousands of stocks and bonds with zero commission.

Additionally, you get a $25 welcome bonus when you make a first deposit of at least $100 in stocks.

You can also buy your ZGRO ETF for free through Questrade without any fee (unless when you sell anything from $4.95 to $9.95).

As a new Questrade client, you are entitled to a $50 bonus when you fund your account with $1000 and above. To get started, you need to open an account.

On the other hand, if you’re looking for a hands-on method of buying ZGRO ETF, you may need to consult a Robo-advisor.

A Robo-advisor will help you build a low-cost ETF portfolio that will rebalance automatically as you fund it or as your portfolio derails from its target allocation.

The truth is, with Robo-advisor, fees may be expensive compared to the fees of zero-commission online brokerages, but it’s worth it.

ZGRO vs VGRO: Similarities and Differences

You’ve learnt enough about what ZGRO entails, and you can now make an informed decision on whether or not it’s right for you.

To help you make a better decision, here I present you with the top competitor of ZGRO, which is VGRO.

In a word, there’s more that relates ZGRO and VGRO than what distinguishes them. In other words, these two great ETFs have much in common that it’s difficult to identify which is the best.

For example, both ZGRO vs VGRO have the same investment objective, strategy and asset allocation.

VGRO, which is one of the all-in-one ETFs of The Vanguard Group, has 80% equity and 20% fixed income allocation, which is equal to  ZGRO asset allocation. Also, Both ETFs are inclined to the Canadian market.

On the other hand, the two have some differences. For example, ZGRO has an appealing low management fee (0.18%) and MER (0.20%) compared to VGRO’s relative high management fee (0.22%) and MER (0.25%).

To learn more about VGRO ETF, click here.

Hopefully, you can now tell the similarities and differences between ZGRO vs VGRO. Above all, you can now make a better decision.

Over to You

The ball is now in your court!

How you play your ball determines not only your investment success but your overall financial freedom.

I have done the hard job for you by identifying a potential investment opportunity that you’re left to exploit based on your investment objective, risk tolerance and time horizon.

As an all-in-one ETF, ZGRO gives you the opportunity of putting all your eggs in one basket with low management fees.

The dividend yield may not be appealing (considering the long-term horizon of the ETF), but the low-medium risk indicator is encouraging for a secure investment.

Overall, my ZGRO review is positive. All the best!

Frequently Asked Questions and Answers on ZGRO ETF

How Risky is ZGRO?

As of the time of writing this review, ZGRO has a low to medium risk rating. However, this is subject to change.

It is important to note that every investment vehicle has its benefits and risks.

But the risk doesn’t necessarily mean bad investment. It only means that you can lose your money through the investment, especially with poor strategy and wrong investment.

Is ZGRO a Good ETF?

Yes, based on my personal experience. ZGRO is indeed a good ETF because it gives you access to a low-cost portfolio of well-diversified assets based on your risk tolerance and investment objective.

How Often Does ZGRO Rebalance?

ZGRO is rebalanced every quarter by BMO Global Asset Management’s investment fund manager.

Have more questions about ZGRO ETF? Drop them in the comment section.

Share on facebook
Share on twitter
Share on linkedin