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  5. ZFH: In the description of the ETF, it mentions the following [BMO Floating Rate High Yield ETF]
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Q: In the description of the ETF, it mentions the following: "The Fund will invest primarily in debt instruments of Canadian corporations that are not investment grade." -- I have difficulty reconciling the "not investment grade" with your previous comment "solid, fairly conservative ETF, especially considering we are entering a tarif war. What am I missing?

André
Asked by André on March 27, 2025
5i Research Answer:

The fund's risk rating itself is 'low to medium'. But we consider the biggest risk to be rate risk, and the floating rate aspect eliminates much of this risk. T Bills are a big component of holdings. It does use credit default swaps, but this improves liquidity of holdings. 45% of the fund is rated BB, 7% BBB or higher. Relatively short maturies do help offset some of the credit risk (effective duration is very low). But you are correct; we would not consider it super-conservative, and may have mis-categorized it somewhat.