The value of BMO allocation asset allocation ETF

For example, ZBAL traded about $14.20 on Tuesday (August 19). Last week, a ZBAL unit cost more than $40. As of August 15, unit holders received two additional funds from each holding unit.

“By reducing recent expenses, BMO Asset Management is committed to making its asset allocation ETFs easier to use by Canadian investors,” Sara Petrcich, BMO’s ETF and alternative, said in a press release.

^†ZMI’s Canadian Violation Unit did not split.

Why stocks and ETFs are split

Stock splits are usually conducted by fast-growing companies and companies whose share prices have risen by more than $100. By increasing outstanding shares and diluting their value, they lowered the stock price without affecting market capitalization or shares held by existing shareholders. Splits can also make more stock purchases through the Dividend Reinvestment Program (DRIPS). However, some issuers hope to raise their stock prices indefinitely.

In recent years, an increasing number of online brokers, including TD Direct Investing and Wealthsimple Trade, have begun offering fractional units of high-priced stocks to make it possible for more small investors to buy. In addition, many high-priced foreign stocks are now available in the form of lower-priced Canadian deposit income (CDR). The emergence of commission-free trading further encourages investors to buy stocks and ETFs in small quantities.

BMO sets a precedent for split asset allocation ETFs

These ETF splits are not the first split in Canada, but BMO is the first unit to separate its asset allocation ETF units. These all-in-one ETFs have a complete portfolio of global stocks and bonds, allowing investors to diversify their exposure to public equity and fixed income markets at low cost prices.

BMO’s asset allocation fund’s principal holding administrative expense ratio (MER) is 0.2% of assets under management each year, comparable to competitor’s iShares and slightly below Vanguard (0.24%), which introduces asset allocation ETFs to Canada in 2019.

Comparable Pioneer ETF Portfolio (VBAL) units traded on August 19 at $35.24; Ishares Core Balanced ETF (XBAL) units at $31.93; Global X Balanced Asset Allocation Class A (HBAL) units at $16.67; and TD Balanced ETF Portfolio (TBAL) units at $20.09, making BMO’s funding the most affordable ETF on the market.

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BMO appears to be figuring out that low-priced ETFs will gain an advantage in a highly competitive market and attract new investors, and the business may become more profitable over time. We will see if its competitors respond.

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About Michael McCullough

Michael is a financial writer and editor at Duncan, British Columbia. He was formerly a former director editor of Canadian Business and editorial director of Canadian broad media. He also writes for the earth and mail and bcbusiness.