BMO Mid-Term US IG Corporate Bond Hedged to CAD Index ETF
ZMU.TO
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- BMO Mid-Term US IG Corporate Bond Hedged to CAD Index ETF (ZMU.TO) is an exchange-traded fund that seeks to replicate, to the extent possible, the performance of the Bloomberg US Investment Grade 5 to 10 Year Corporate Bond Capped Index CAD Hedged, net of expenses. The ETF provides exposure to a portfolio of mid-term U.S. investment-grade corporate bonds with maturities between five and ten years, issued by U.S. and non-U.S. industrial, utility, and financial issuers; it primarily invests in the BMO Mid-Term US IG Corporate Bond Index ETF (ZIC) while using derivative instruments such as currency forwards to hedge U.S. dollar exposure back to Canadian dollars. Eligible securities are fixed-rate, taxable, publicly issued bonds rated investment-grade (Baa3/BBB- or higher), with at least US$750 million outstanding and purchased within five years of issuance; issuer exposure is capped at 2% with the three largest issues included per issuer. Launched on March 20, 2013, the ETF is managed by BMO Asset Management Inc., an indirect wholly-owned subsidiary of Bank of Montreal, with headquarters in Toronto, Ontario. It trades on the Toronto Stock Exchange in Canadian dollars (listed CAD units), targeting Canadian investors seeking yield from U.S. corporate credit while mitigating currency risk; as of recent data, it maintains net assets exceeding CAD 3 billion, a management expense ratio of approximately 0.28%, and a yield around 4%. The portfolio allocation emphasizes financials (approximately 28.5%), consumer staples (13.1%), information technology (11.2%), and other sectors including communication services, energy, and health care. In recent years, the ETF has seen its investment risk rating adjusted from low to low-to-medium on January 17, 2023, following a review under National Instrument 81-102 standards, reflecting ongoing portfolio monitoring amid market volatility . It continues to announce regular cash and reinvested distributions, with updates issued in March 2025, September 2025, and November 2025 for annual reinvested amounts, underscoring stable operational execution without major strategic shifts, acquisitions, or product launches specific to ZMU. The fund relies on standing instructions from its independent review committee for related-party transactions involving BMO affiliates, such as trades with BMO Nesbitt Burns Inc., ensuring arm's-length terms comparable to industry standards .