ZEQT Review 2024: BMO All-Equity ETF Portfolio Analysis
ZEQT Review Rating: 3.8/5
All-equity ETFs provide some of the highest returns you can expect from investment assets out there.
But that’s not surprising since they have high-risk levels due to their higher stock allocations.
However, the all-equity ETF you invest in determines both your investment risk level and returns.
With different all-equity ETF portfolios out there, you want to choose the best one.
As the latest addition to the all-equity ETFs in Canada, you may be wondering whether ZEQT is worth it.
This ZEQT review provides a detailed analysis of what the BMO all-equity ETF entails and how it compares with similar ETFs in Canada.
Overview of ZEQT Review
The following are the current features of the BMO ZEQT ETF as of February 14, 2024:
| Name | BMO All-Equity ETF |
| Ticker | ZEQT |
| Inception date | January 17, 2022 |
| Assets allocation | 100.02% on stocks & -0.02% on cash and cash equivalents |
| Minimum investment | $43.36 |
| Management fee | 0.18% |
| MER | 0.20% |
| Number of underlying holdings | 7 |
| Top market capitalization | US |
| Dividend yield | 2.24% |
| Distribution frequency | Quarterly |
| Cumulative return since inception | 12.24% |
| Risk level | Medium |
What is ZEQT?
ZEQT is the ticker symbol of the BMO All-Equity ETF Portfolio that’s traded on the Toronto Stock Exchange (TSE).
The ETF was newly launched on January 17, 2022, to provide investors with equity growth and long-term capital appreciation through global equity ETFs exposure.
By investing only in equity securities, you can expect a great deal of risk and returns on the BMO ZEQT ETF.
As a new ETF, it’s essential to answer the following questions before determining whether or not to invest in it:
- What does ZEQT bring to the table of all-equity ETFs in Canada?
- What makes the ETF different or unique from similar ETFs?
- What are the costs of investing in ZEQT?
- What are the pros and cons of investing in ZEQT?
This ZEQT review answers all these questions and more to help you make an informed decision.
ZEQT Investment Objective
ZEQT seeks to offer investors with equity growth and long-term capital appreciation. As a result, the ETF invests all funds in global equities.
While the ETF invests across different countries, it allocates most of its funds in the US and Canadian markets.
The portfolio manager, BMO Assets Management Inc., rebalances the ETF quarterly to meet its target allocation.
ZEQT Assets Allocation
As of February 13, 2024, ZEQT has the following assets allocation:
- Stock = 100.02%
- Cash and Cash Equivalents = -0.02%
The above allocation shows that ZEQT is an all-round all-equity portfolio. This makes it odd among other all-equity ETFs that allocate across stocks and cash or cash equivalents.
The implication of this is that the ZEQT ETF poses more risk than other all-equity ETFs out there. Are you equal to that? Keep reading to learn more.
ZEQT Stock Holdings
The following are the underlying ETFs of ZEQT as of the time of updating this review.
| ETF | Allocation |
| BMO S&P 500 INDEX ETF (ZSP) | 45.64% |
| BMO S&P/TSX CAPPED COMPOSITE INDEX ETF (ZCN) | 23.59% |
| BMO MSCI EAFE INDEX ETF (ZEA) | 19.72% |
| BMO MSCI EMERGING MARKETS INDEX ETF (ZEM) | 7.46% |
| BMO S&P US MID CAP INDEX ETF (ZMID) | 2.57% |
| BMO S&P US SMALL CAP INDEX ETF (ZSML) | 1.04% |
| CASH | -0.02% |
With these underlying holdings, it’s obvious that the ZEQT ETF is not on the same page as other all-equity ETFs that have multiple underlying holdings.
As a result, the ZEQT ETF provides limited exposure compared to similar all-equity ETFs. And as you might know, limited exposure equates to limited diversification.
ZEQT Geographic Allocations
Geographic allocations indicate the countries that the ETF invests your funds. This also informed the ETF exposure.
The following are the countries that ZEQT invests funds and their allocations as of February 14, 2024:
| Country | Allocation |
| United States | 47.67% |
| Canada | 24.26% |
| Japan | 4.59% |
| United Kingdom | 2.67% |
| France | 2.28% |
| Switzerland | 2.15% |
| China | 1.69% |
| Germany | 1.66% |
| Australia | 1.44% |
| Other | 10.27% |
As you can see, ZEQT allocates most funds in the US markets. However, this is common with other all-equity ETFs in Canada such as VEQT and XEQT. It’s also worth noting that ZEQT doesn’t change its geographic allocation frequently. The current allocation has been the same since last 2022.
ZEQT Sector Allocations
While ZEQT allocates 100% of its funds to global equities, it doesn’t disclose information about the specific sectors it allocates the funds.
This is unlike other all-equity ETFs that disclose the names of the sectors with their corresponding allocations.
Nevertheless, this may not be a problem if you don’t mind the type of companies your money is invested in.
ZEQT ETF Portfolio Performance
As a new ZEQT doesn’t provide enough performance data for critical judgement. However, it has so far provided up to 2-year return which can be used for comparison.
As of January 31, 2024, ZEQT provided a 1-year annualized return of 11.87% and a since inception annualized return of 5.88%.
The cumulative returns of ZEQT as of January 31, 2024 are as follows:
| YTD | 1.43% |
| 1 Month | 1.43% |
| 3 Months | 11.15% |
| 6 Months | 5.00% |
| 1 Year | 11.87% |
| 2-Year | 9.73% |
| Since Inception | 12.24% |
Compared to the returns of similar portfolios, ZEQT has competitive returns.
ZEQT Fees
As of the time of writing this review, the BMO All-Equity ETF (ZEQT) has the following fee structure:
- Management fee = 0.18%
- Management expense ratio (MER) = 0.20%
Compared to the fees of mutual funds or similar portfolios, ZEQT is relatively low-cost.
However, you can further reduce the cost of trading the ETF by using an online discount brokerage. More on this later.
Pros and Cons of ZEQT Stock
Like other all-equity ETFs, ZEQT also has its pros and cons discussed briefly below:
Pros of ZEQT
- Low management fee and MER: The ZEQT management fee and management MER are relatively low compared to those of similar mutual funds and similar portfolios.
- Competitive dividends: Compared to the dividends of similar ETFs, ZEQT had competitive dividends in its last distribution.
- Above-average returns: ZEQT doesn’t have the best returns out there but it provided above-average returns in the last two years of its existence.
- Eligibility for registered accounts: The ETF supports multiple registered accounts including TFSA, RESP, RRSP, RRIF and DPSP.
Cons of ZEQT
- Limited exposure: Due to its limited underlying holdings, ZEQT has limited exposure compared to similar portfolios.
- High risk: ZEQT’s higher stock allocation makes it relatively riskier than similar ETFs that allocate significant funds on cash/cash equivalents.
My ZEQT Review Rating
I rate ZEQT 3.8 out of 5 stars based on comparative analysis and the overall rating of the following features.
ZEQT Review Rating Methodology
Overall Rating
Hence, my ZEQT review is positive and recommendable to investors looking for an all-equity ETF with the following:
- Low management fee and MER
- Competitive dividends
- Above-average returns
- Registered plans
How to Buy ZEQT ETF
There are different options for buying ZEQT ETF in Canada. The following are the major ones:
| Option | Description | How to |
| DIY | This entails doing everything yourself, such as buying, managing and selling the ETF. | Use one of the best online discount brokerages out there, such as Wealthsimple Trade or Questrade |
| Financial advisor | This entails having your financial advisor buy the ETF on your behalf. This may be more costly than doing it yourself. But it may save you time and risk. | Contact your financial advisor |
If you want a more hands-off way of investing in ZEQT, you can consider using a robo-advisor. With a robo-advisor, all you need is to describe your situation and provide funds.
The robo-advisor will handle everything on your behalf, from investing to portfolio rebalancing. Some of the best robo-advisors in Canada include Questwealth Portfolios and Wealthsimple Invest.
RELATED: Best Free Trading Platforms in Canada
ZEQT vs VEQT
| Key Feature | ZEQT | VEQT |
| Portfolio manager | BMO Assets Management Inc. | Vanguard Investments Canada Inc. |
| Date of inception | January 17, 2022 | January 29, 2019 |
| Asset allocation | 100.02% on stocks & -0.02% on cash and cash equivalents | 99.99% on stocks & 0.01% on short-term reserves |
| Management fee | 0.18% | 0.22% |
| MER | 0.20% | 0.24% |
| 1-year return | 11.87% | +11.43% |
| Dividend yield | 2.24% (annualized) | 1.86% (annualized) |
| Dividend frequency | Quarterly | Annually |
| Top market capitalization | US | US |
| Registered accounts | Available | N/A |
| Risk level | Medium | Medium |
| Exchange | Toronto Stock Exchange (TSX) | Toronto Stock Exchange (TSX) |
Vanguard All-Equity ETF Portfolio (VEQT) is the equivalent of the BMO All-Equity ETF (ZEQT) both of which are weighted towards the US markets.
However, VEQT is about 3 years older than ZEQT, having been launched in January 2019.
With high allocations to equity and minor allocations to short-term reserves, VEQT was able to offer a 1-year return of 1-year return to investors as of January 31, 2024. This is slightly lower than ZEQT’s 1-year return under the same timeframe.
ZEQT also has a competitive dividend yield and supports registered plans. Also, ZEQT has a lower management fee and MER than VEQT.
Nevertheless, you can’t make the wrong choice with VEQT if you’re comfortable with annual dividend distribution.
Click here to learn more about VEQT
Related: Best Vanguard ETFs in Canada
ZEQT vs XEQT
| Key Feature | ZEQT | XEQT |
| Portfolio manager | BMO Assets Management Inc. | BlackRock |
| Date of inception | January 17, 2022 | Aug 7, 2019 |
| Asset allocation | 100.02% on stocks & -0.02% on cash and cash equivalents | 99.79% on equity & 0.21% on cash and or/derivatives |
| Management fee | 0.18% | 0.18% |
| MER | 0.20% | 0.20% |
| 1-year return | 11.87% | 11.54% |
| Dividend yield | 2.24% (annualized) | 2.80% (annualized) |
| Dividend frequency | Quarterly | Quarterly |
| Top market capitalization | US | US |
| Registered accounts | Available | Available |
| Risk level | Medium | Low to medium |
| Exchange | Toronto Stock Exchange (TSX) | Toronto Stock Exchange (TSX) |
The iShares Core Equity ETF Portfolio (XEQT) is the equivalent of ZEQT and VEQT. The ETF is 3 years older than ZEQT and has performed impressively since its inception.
Both ZEQT and XEQT are weighted towards the US markets, support registered accounts and distribute dividends quarterly.
Unlike ZEQT, XEQT slightly allocates funds across equity and cash/cash derivatives, limiting its risk level.
As you can see from the above table, XEQT had higher dividends than ZEQT in their last distributions. Although ZEQT had a slightly higher 1-year return as of January 2024.
The bottom line is that you can’t make the wrong choice with XEQT if you’re looking for a low-cost all-equity ETF with competitive performance and yield.
Click here to learn more about XEQT
ZEQT vs VEQT vs XEQT
Based on the foregoing analysis, below is a summary of how ZEQT compares with VEQT and XEQT.
| Key Feature | ZEQT | VEQT | XEQT |
| Portfolio manager | BMO Assets Management Inc. | Vanguard Investments Canada Inc. | BlackRock |
| Date of inception | January 17, 2022 | January 29, 2019 | Aug 7, 2019 |
| Asset allocation | 100.02% on stocks & -0.02% on cash and cash equivalents | 99.99% on stocks & 0.01% on short-term reserves | 99.79% on equity & 0.21% on cash and or/derivatives |
| Management fee | 0.18% | 0.22% | 0.18% |
| MER | 0.20% | 0.24% | 0.20% |
| 1-year return | 11.87% | +11.43% | 11.54% |
| Dividend yield | 2.16% (annualized) | 1.86% (annualized) | 2.80% (annualized) |
| Dividend frequency | Quarterly | Annually | Quarterly |
| Top market capitalization | US | US | US |
| Registered accounts | Available | N/A | Available |
| Risk level | Medium | Medium | Low to medium |
| Exchange | Toronto Stock Exchange (TSX) | Toronto Stock Exchange (TSX) | Toronto Stock Exchange (TSX) |
RELATED:
How to Choose the Best All-Equity ETF Portfolio in Canada
Are you confused about which of the above all-equity ETFs to choose? You don’t have to be. Below are the key factors to consider when narrowing down your selection.
- Asset allocations: As you can see from the above analysis of ZEQT alternatives, not all all-equity ETFs have the same asset allocations. This simply means that their risk levels vary as per their asset allocations. Choose the ETF that suits your risk tolerance.
- Exposure: Choosing a portfolio with multiple underlying holdings would likely give you greater diversification.
- Fees: The management fee and MER should be the center of your selection. The higher the fees, the more costly your investment.
- Dividend yield and returns: To make the most from your investment, you need to consider a portfolio with competitive dividend yield and returns.
Executive Summary on ZEQT Review
ZEQT is a newcomer in the world of all-equity ETFs. But it doesn’t come empty-handed.
It came along with competitive dividend yield, above-average returns and low fees that are lacking among some of the oldest all-equity ETFs in Canada.
However, the ETF’s limited exposure, above-average equity allocations and short history should be of concern to any risk-conscious investor.
While my ZEQT review is positive, I suggest you critically compare the ETF with similar portfolios before making a final decision.
Where do you go from here? I will be pleased to know in the comment section.
ZEQT Review
Summary
While ZEQT is a newcomer in the world of all-equity ETFs, it came with a competitive dividend yield, above-average returns and low fees that are lacking among some of the oldest all-equity ETFs out there,
