The annual pace of inflation is approaching 5% in Canada, an all-time high in 30  years. Combinedwith low yields, investors face challenges around theirfixed income portfolio allocations.  BMO Asset ManagementInc. offers investors convenient access to a portfolio of unique high yielding fixed  income securities through the BMO Canadian Bank Income Index ETF (ZBI). This ETF seeks to replicate the performance of the Solactive Canada Bank Income Index. 

The Solactive Canada Bank Income Index aims to track the performance of bonds, NVCC bonds, LRCN  instruments, and preferred shares issued by Canadian banks in Canadian Dollars (CAD). The index is divided  into three independent buckets: bonds, LRCN, and preferred shares. The bond bucket contains bonds and NVCC  bonds; the LRCN bucket holds institutional preferred shares and LRCN instruments; lastly, the preferred  shares bucket holds listed preferred shares securities. The index is reconstituted monthly to capture new  issuance. There are minimum market capitalization and minimum average daily value traded requirements on  new and current index components.  

The ETF began trading on February 10th, 2022, on the Toronto Stock Exchange (TSX) under the ticker symbol  ZBI. 

Timo Pfeiffer, Chief Markets Officer at Solactive, says: “The Canadian banking system has been consistently  ranked among the soundest in the world. With the wave of inflation and the low yield environment, we are  excited to be partnering with BMO once more on a product featuring a portfolio of Canadian bank securities.”  

Mark Raes, Head of Product (Canada) at BMO Asset Management, comments, “Investors are looking for  innovation in the fixed income market; by including LRCNs and preferred shares, we can shorten duration and  obtain higher yield than the aggregate bond market. This solution also gives investors access to certain market  segments typically only accessible by institutions.”