Some investors are fine with setting up their Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio and just forgetting about it for a couple of decades. Indeed, it really can be as simple as buying and holding an index fund and adding to a position gradually over time whenever you’ve got room to contribute more. And while it’s good to be content with a market return, there are some investors out there who want to do better as they pick and choose the best-in-breed companies, preferably at discounted multiples.
Of course, it can be tough to get a decent price at any given time unless, of course, there’s a market sell-off and a perceived crisis brewing. In any case, this piece will check in with one outstanding and low-cost ETF (exchange-traded fund) product offered by Bank of Montreal. They’re a great fit for investors who want to set, forget, and do well (maybe even a bit better than the market averages) over long-term time horizons.
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BMO Growth ETF Portfolio
First, we have BMO Growth ETF (TSX: ZGRO), which is a remarkable “all-in-one” type of solution for passive investors looking for more of a hands-off approach. The ETF provides instant exposure to a wide range of international stocks (think the S&P 500, TSX Index, and developed international markets, with a hint of emerging markets) as well as a good mix of bonds.
For those investors who want asset allocation taken care of and a low management expense ratio (MER), ZGRO is a fantastic option that covers most bases for those who are seeking long-term capital appreciation and a level of geographic diversification that’s above and beyond what most other ETFs offer these days. For such all-in-one kinds of ETFs, you can expect to pay a pretty hefty MER. Not with the ZGRO, which has a ridiculously low 0.20% MER, which is even lower than some U.S. equity index ETFs!
Underneath the hood, you’ll get around 36% in exposure to the S&P 500, 20% to the S&P/TSX Capped Composite Index ETF, 14% to the European region, 6.5% to emerging markets (for greater growth), and over 3% in small- and mid-caps. Also, you’ll get more than 20% exposure to a wide selection of U.S. and Canadian bonds.
With a very diversified mix (across market caps and geographies) and a rough 80/20 stock-to-bond allocation, the ZGRO is a well-balanced one-stop-shop kind of investment, one that may even be a better bet than the S&P 500 or TSX Index on their own. In any case, the ZGRO seems to check all the boxes for ETF investors looking to go down the self-guided route without having to overthink things like asset allocation, international diversification, and exposure to smaller caps.
The Foolish bottom line on ZGRO
Indeed, the S&P 500 is too heavily weighted in tech, while the TSX has more than its fair share of energy and financials. With both indices combined and added to global indices while including aggregate bond exposure, I’m inclined to view the ZGRO as the one perfect play for those who want to just set and forget. It really is a complete portfolio and one that investors should consider following the recent summertime fee reduction.
