While many investors continue to pile into artificial intelligence or energy plays tied to headlines like regime change in Venezuela, I am looking elsewhere. My preference is for investments backed by real assets. A real asset is something with a physical footprint that generates cash flow through ownership, leasing, or long-term contracts.
Two areas that fit this definition particularly well are infrastructure and real estate. They operate in different corners of the real asset universe, but they share common traits: tangible assets, regulated or contractual revenue, and cash flows that tend to hold up across economic cycles. Institutional investors like the Canada Pension Plan (CPP) love them!
What many retail investors overlook is that both are easily accessible through exchange-traded funds (ETFs). Here are two options from BMO that I like for 2026.
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Global infrastructure exposure
My first pick is BMO Global Infrastructure Index ETF (TSX:ZGI).
This ETF tracks the Dow Jones Brookfield Global Infrastructure North American Listed Index. To qualify for inclusion, companies must be based in Canada or the U.S., and at least 70% of their cash flow must come from the development, ownership, leasing, concession, or management of infrastructure assets.
In practice, that leads to a portfolio of about 50 holdings concentrated in energy and utilities. You will find companies involved in oil and gas storage and transportation pipelines, electric, gas, and water utilities, telecom towers, and select airport and marine port operators. These businesses tend to have inflation-sensitive revenue, which can help during periods when prices rise, as seen in 2022.
Performance has been solid. Over the past five years, ZGI has delivered an annualized total return of 11.27% with dividends reinvested. As of January 8, the ETF offers an annualized yield of 2.67% after accounting for its 0.61% management expense ratio.
Canadian real estate exposure
For real estate, my preference is diversification via BMO Equal Weight REITs Index ETF (TSX:ZRE).
Canadian real estate has cooled meaningfully after the post-COVID frenzy, which makes this a more interesting entry point. ZRE currently holds 21 Canadian REITs across retail, multi-family residential, industrial, diversified, healthcare, and office properties. You get exposure to the entire REIT landscape, and not just a single rental property.
The equal-weight structure is important. Each REIT is capped at roughly a 5% weight at rebalance, which prevents one or two large names from completely dominating the portfolio and creating concentration risk.
Income is a major feature here. ZRE currently offers an annualized yield of 4.73%, paid monthly. Keep in mind that this income is not eligible Canadian dividends. It is mostly treated as ordinary income, which matters more outside registered accounts.
Fees are in line with ZGI at 0.61%. Given the relatively small number of holdings, some investors could replicate this exposure themselves, but for a hands-off approach with automatic rebalancing, ZRE is a clean solution.
