Balanced mutual funds have long been a popular choice for retirees. These funds – which usually see their assets split between stocks and bonds – offer dependable income, stable asset values, and protection when stocks inevitably drop.
There’s just one problem. The average balanced fund comes with a management fee of approximately 2%. Some are even higher.
In an era where a 4% yield is considered generous, it’s hard to make much money with 2% taken right off the top.
The BMO Monthly Income ETF (TSX:ZMI) is a great alternative for retirees and other folks looking for a steady income stream. It currently yields 4% while having a low management expense ratio of 0.61%.
The ETF has been a steady, albeit somewhat boring performer over the last five years. A $10,000 investment made on May 2, 2012, would be worth approximately $13,000 today, plus dividends.
ZMI is a smaller ETF; it has less than $100 million in assets. Average daily trading volume is 6,700 shares, which is more than enough for the average investor.
The fund consists entirely of other BMO ETFs. Top holdings include both a short-term and medium-term bond ETF, a U.S. dividend covered call ETF, a Canadian dividend ETF, and a European high dividend ETF. It also includes some preferred shares and high-yield bonds.
Like the average balanced fund, this ETF has a low correlation to the overall stock market. It has a beta of 0.32, meaning it’s just 32% as volatile as the entire stock market.
