BMO Laddered Preferred Share Index ETF (ZPR:CA)
BMO Laddered Preferred Share Index ETF has been designed to replicate, to the extent possible, the performance of the Solactive Laddered Canadian Preferred Share Index, net of expenses. The Fund invests in and holds the Constituent Securities of the Index in the same proportion as they are reflected in the Index.
The Solactive Laddered Canadian Preferred Share Index includes Canadian preferred shares that meet size, liquidity, listing and quality criteria. The Index uses a five year laddered structure where annual buckets are equal weighted while constituent securities within each bucket are market capitalization weighted.
IFM Investment Tip:
We are not certain about the benefits of using a five-year ladder structure when owning preferred shares. Unlike for bonds, we are not sure it is beneficial structure when investing in preferred shares. The ETF states it will only invest in Rate-Reset preferred shares with reset periods less than 5 years. Apparently they will buy Rate-Reset preferred shares and weight them equally between each of the 5 buckets - those with reset dates in 1-year, 2-year, 3-year, 4-year and 5-year. As each preferred share's dividend is reset and fixed for another term, it will simply move from the 1-year bucket to the 5-year bucket. We are not sure what the benefits the Laddered structure are for investors.
In fact, this Laddered structure may be robbing investors of a valuable feature inherent in most Rate-Reset preferred shares - the ability to convert into a Floating-Rate preferred share series on dividend reset dates. We do not understand what benefits the Laddered structure can offer investors and we are so sure that laddering Rate-Reset preferred shares will reduce the risks associated with preferred shares as suggested by BMO in their article -Understanding Preferred Shares
Index Note: Underlying index was changed on October 2015. From it's November 2012 inception until October 2015, this ETF was designed to replicate the performance of the S&P/TSX Preferred Share Laddered Index, net of expenses.
- Fact Sheet
- TMX Money ETF Screener
- Morningstar ETF Screener
- Underlying Index/Commodity
- Solactive Laddered Preferred Share Index
- Asset Category
- Fixed Income
- Average Duration
- Average Maturity
- Date Established
- November 14, 2012
- Annual Management Fee
- 0.45% plus 0.05% Operating Expenses (2016)
- Trading Expense Ratio (TER)
- 0.06% (2016)
- Management Expense Ratio (MER)
- 0.56% (2016)
- Additional Performance Fee(s)
- Yes - In 2016, the ETF had a yield equal to 4.66% net of Return of Capital (ROC) payments.
- Distribution Dates
- Monthly - toward the beginning of each month.
- Distribution Details
- Dividend Reinvestment Plan (DRIP)
- Yes Visit ETF Website for details
- Rebalancing Frequency
- Portfolio Turnover Ratio
- Was 57.15% in 2016, 39.07% in 2015, 25.89% in 2014 & 19.12% in 2013
- Simplified Prospectus
- Last Updated