The BMO Dow Jones Industrial Average Hedged to CAD Index ETF

What is the BMO Dow Jones Industrial Average Hedged to CAD Index ETF?

The BMO Dow Jones Industrial Average Hedged to CAD Index ETF (ZDJ) is an exchange-traded fund (ETF) that tracks the performance of the Dow Jones Industrial Average (DJIA), a stock market index that tracks the 30 largest publicly traded companies in the United States.

This ETF is designed to provide Canadian investors with exposure to the DJIA with the added benefit of currency hedging. This means that the ETF's returns are hedged against fluctuations in the value of the Canadian dollar relative to the U.S. dollar.

How does the BMO Dow Jones Industrial Average Hedged to CAD Index ETF work?

The BMO Dow Jones Industrial Average Hedged to CAD Index ETF uses a hedging strategy to reduce the impact of currency fluctuations on its returns.

The ETF invests in a portfolio of U.S. stocks that track the DJIA. It then uses currency forwards to hedge against fluctuations in the value of the Canadian dollar relative to the U.S. dollar.

As a result, the ETF's returns are less sensitive to changes in the value of the Canadian dollar than the returns of an unhedged ETF that tracks the DJIA. This can be beneficial for Canadian investors who are looking to reduce the risk of currency fluctuations in their investment portfolios.

What are the benefits of investing in the BMO Dow Jones Industrial Average Hedged to CAD Index ETF?

There are several benefits to investing in the BMO Dow Jones Industrial Average Hedged to CAD Index ETF, including:

• Exposure to the DJIA: The ETF provides Canadian investors with exposure to the DJIA, one of the most well-known and widely followed stock market indices in the world.
• Currency hedging: The ETF's currency hedging strategy can help reduce the risk of currency fluctuations on its returns. This can be beneficial for Canadian investors who are looking to reduce the risk of currency fluctuations in their investment portfolios.
• Diversification: The ETF invests in a portfolio of 30 stocks, providing investors with diversification across different sectors and industries.
• Low cost: The ETF has a low management fee of 0.12%, making it one of the most cost-effective ways to gain exposure to the DJIA in Canada.

What are the risks of investing in the BMO Dow Jones Industrial Average Hedged to CAD Index ETF?

As with any investment, there are some risks associated with investing in the BMO Dow Jones Industrial Average Hedged to CAD Index ETF, including:

• Market risk: The ETF's returns are tied to the performance of the DJIA, which can fluctuate significantly over time. This means that investors could lose money if the DJIA declines in value.
• Currency risk: Although the ETF's currency hedging strategy can reduce the risk of currency fluctuations, it does not eliminate it completely. Investors could still lose money if the value of the Canadian dollar fluctuates significantly relative to the U.S. dollar.
• Tracking error: The ETF's returns may not perfectly track the returns of the DJIA due to the costs of hedging and other factors. This could result in investors earning lower returns than they would if they invested directly in the DJIA.