Opinions
Daniel Straus
BMO Money Market Fund
ZMMK-T
PAST TOP PICK
Aug 21, 2024
Stock price when the opinion was issued
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A short-term money market ETF is not going to be impacted by currency volatility. They're Canadian plays in Canada. Even though the BOC is a lot more aggressive in terms of cutting rates because the Canadian economy is significantly weaker than that of the US.
The more in money market you are, the safer it is because the time to maturity of holding assets is lower. So the shorter the duration, the safer. The more government, the safer, but also a lower yield.
For an enhanced money market yield, he really likes ZST.
Money market exposure, but focused on government debt. Both buy instruments of less than a year's duration.
ZST is corporate debt -- slightly higher risk, so you get a premium yield. No junk bonds. Best-quality corporate bonds in Canada. Some credit risk, but quality holdings make this minimal. Money-market like, very safe, additional yield. Likes it.
Now paying 15-20 bps higher than a plain-vanilla high-interest savings ETF. Good if you need access to cash, never drops below where you bought it if you buy on the ex-dividend date. A cash-like position in your portfolio. Pays interest.
The sawtooth graph is explained as money accumulating on short-term paper holdings, and then paid out all at once every month. You can, of course, automatically reinvest the proceeds.