Bond ETFs are investment funds that primarily focus on bonds or fixed-income securities, often considered as a safer investment option, particularly in times of market volatility. They offer portfolio diversification and help lower overall risk. Today, we have shortlisted two such Canadian ETFs – BMO Aggregate Bond Index ETF (TSE:ZAG) and BMO Core Plus Bond ETF (TSE:ZCPB) – that provide exposure to fixed-income securities, ensuring steady returns.
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Let’s take a deeper look at these two ETFs.
BMO Aggregate Bond ETF
The BMO Aggregate Bond ETF (ZAG) tracks the performance of the FTSE Canada Universe Bond Index. ZAG invests in a diversified portfolio of federal, provincial, and corporate bonds with maturities exceeding one year. Moreover, the ETF is currency-hedged, reducing exchange rate risk for Canadian investors.
ZAG was founded in January 2010 and has a low expense ratio of 0.09%. As of date, the ETF has an AUM (assets under management) of C$9.51 billion. Year-to-date, ZAG ETF has generated returns of over 3%.
BMO Core Plus Bond ETF
The BMO Core Plus Bond ETF (ZCPB) is an actively managed fund that aims to provide a steady interest income along with the potential for capital growth. It primarily invests in a diversified portfolio of Canadian dollar-denominated fixed-income securities, including government bonds, corporate bonds, and mortgage-backed securities.
ZCPB ETF was founded in May 2018 and carries an expense ratio of 0.57%. As of date, the ETF has an AUM of C$1.45 billion. Year-to-date, ZCPB ETF has returned 3.6%.
Concluding Thoughts
ETFs are a low-cost, diversified, and transparent way to participate in the market. Investors looking for potential recommendations could consider ZAG and ZCPB ETFs to gain exposure to the fixed income market.
