Opinions
Michael Bowman
BMO Monthly Income ETF
ZMI-T
BUY
Jun 18, 2013
$15.750
Stock price when the opinion was issued
E.T.F.'s
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COMMENT
ZMI vs. ZZZD ZMI is a balanced income-focused ETF. ZZZD is his own ETF that he manages--a sleep-at-night global dividend ETF. ZMI is a lot more fixed income (to preserve capital) and is far more passively managed vs. ZZZD which is active, hence riskier. Very different focuses, but both generate a lot of income.
E.T.F.'s
BUY
[As sole holding]. It is a yield focused balanced fund made up of a bunch of ETFs that are more yield-centric. The only criticism is that there is probably too much exposure to Canada. When it is in a registered account then you don’t get the benefit of the dividend tax credit. Making it the only holding in an account there is 'manager risk' and perhaps there is too much concentration in Canada if it is in a registered account. Otherwise it is not a bad idea.
E.T.F.'s
DON'T BUY
The bond markets are impaired and will be for a while. Low interest rates are here to stay. Income focused ETFs with exposure to bonds will not return 4-5%. Are you getting return of capital or yield? Must look into the structure where the returns are coming from. Both are similar. Both ZMI and XTR give you exposure to diversified income. All fixed income has negative return after inflation.
E.T.F.'s
HOLD
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research
The fund owns a mix of global bonds and stocks, with 57% equity exposure and 40% US exposure. It also owns 10% cash. While certainly not risk free, it is a well-balanced ETF paying a 4.75% dividend and we would consider it fairly conservative.
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E.T.F.'s
This is a great ETF. 50% equity and 50% fixed income and is yield weighted. They take the highest yield of the equity ETFs that they have and then take the highest yielding fixed income ETFs that they have and then put them together. Yield is about 4.6%.