There wasn’t a whole lot about 2020 that was expected—least of all an unprecedented bull market that emerged from one of the worst pandemics in modern history.
But what’s continuing to surprise is the resiliency of this bull market, and the fact that it’s not showing any signs of letting up.
BMO Capital Markets Chief Investment Strategist Brian Belski called this phenomenon a “reset for the next 10 years of our 20-year bull market.”
What could that reset entail? A potential return to a more traditional way of investing—focusing on fundamentals like corporate governance and solid financials.
That shift is coinciding perfectly with a U.S. stock market that’s rich in potential and excitement.
Between a new government in the White House seemingly more willing to invest in U.S. infrastructure and with vaccine rollouts proving to be enormously effective, you have the potential for fertile ground for continued stock market growth.
But how can investors reap the benefits of these favourable conditions?
How to Ride the Bull
Belski sees an all-cap, all U.S. equity fund as potentially being among one way to benefit from this bullish market.
An all-cap fund is one where companies of all market capitalizations (market capitalizations being essentially how the market measures a security’s size by taking all the shares outstanding and multiplying them by the price of the stock). Unlike some well-known U.S. market indexes that concentrate on the largest companies, it targets a wider swath of securities to include mid-sized and smaller companies.
BMO U.S. All Cap Equity Fund (ETF Series: ZACE), managed by Belski, is benchmarked to the S&P 1500, demonstrating that it covers a much wider group of securities.
Belski’s approach—based on decades of research—sees the fund’s primary growth opportunities in the following industries:
- Financials: Bank of America, Blackrock, among others
- Consumer Discretionary: Amazon, Home Depot, among others
- Communication Services: Disney, Netflix, among others
- Information Technology: Apple, Salesforce.com, among others
- Health Care: Pfizer, Gilead Sciences, among others
The above listed sectors and securities make up just a segment of the BMO U.S. All Cap Equity Fund.
This approach also incorporates BMO capital market expertise, focus on selecting only high-quality companies from a wide universe of investments. Belski also conducts propriety research to discover hidden gems in the market that can potentially help the fund outperform the market.
Furthermore, he incorporates macroeconomic views and themes in order to help construct a more robust portfolio, using insights gained from years of market experience to help make the best possible security selections.
And finally, our ETF series fund uses a fundamental bottom-up process that identifies opportunistic equities while steering clear of expensive/momentum stocks masquerading as quality.
Active vs. Passive Portfolios
Another thing to keep in mind for investors looking to profit from this bull market is shedding the false dichotomy of “active vs. passive” and instead adopting a strategy that incorporates both active and passive investment vehicles.
An actively managed portfolio tends to be concentrated on a smaller number of securities, while a traditional broad-based approach provides wider market exposure.
Having both incorporated in your investment portfolio has the potential to lead to a strong outcome, with the benefit of not being overly exposed to the volatility of stocks alone, while simultaneously having the ability to potentially reap the benefits of stocks that are fast exploding in value.
BMO ETFs: Looking for Growth ETFs to add to Your Portfolio?
If you’re looking to add a growth ETFs on the market, then evaluate BMO ETFs.
We are a leading ETF provider in Canada with more than 11 years of experience providing clients with over one hundred strategies, accounting for over 25% market share in Canada. 1
Benefit from our comprehensive suite of ETFs developed in Canada, such as:
- Cost effective core equity ETFs following market leading indexes
- A broad range of fixed income ETFs
- Solution-based ETFs responding to investor demand
- Innovation with smart beta ETFs
- Combining active and passive investing with ETF series of active mutual funds
BMO ETFs is partnering with you to help maximize the potential in your portfolio. Visit our website and sign up for our webinars to learn more about how you can benefit from BMO ETFs.
1 Morningstar, June 2021
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This communication is for information purposes. The information contained herein is not, and should not be construed as, investment, tax or legal advice to any party. Particular investments and/or trading strategies should be evaluated relative to the individual’s investment objectives and professional advice should be obtained with respect to any circumstance.
The portfolio holdings are subject to change without notice and only represent a small percentage of portfolio holdings. They are not recommendations to buy or sell any particular security.
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