Key Morningstar Metrics for BMO Equal Weight REITs Index ETF ZRE
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BMO Equal Weight REITs ETF constructs an equal-weighted portfolio of Canadian real estate investment trusts. Its dependency on Canadian real estate limits its scope and raises risk relative to Morningstar Category peers that have more globally diverse portfolios.
The exchange-traded fund tracks the Solactive Equal Weight Canada REIT Index, which targets Canadian REITs that meet its requirements for market cap and ease of trading. That limits the breadth of the portfolio, which holds roughly 20 REITs on average. That means the top 10 holdings tend to account for half its portfolio. The average peer in the real estate equity category diversifies more, with about 15 times the number of holdings and 10 percentage points less in its top 10, on average.
Equal weighting trims the portfolio’s best performers and reallocates to underperformers during semiannual rebalances. This gives the portfolio a value tilt. Rewarding laggards can hurt the fund if negative momentum continues, but it hasn’t been an issue so far. The ETF also favors smaller REITs compared with its average peer. Small-value holdings can increase volatility, but research suggests investors should be compensated for this extra risk over time.
Country risk looms large in this ETF. Targeting only Canadian REITs means the ETF can lag more globally minded peers when Canadian REITs underperform. The average fund in the category stashes almost half of its portfolio in US REITs, a third in Canadian REITs, and the rest across the world.
The ETF typically outperforms when Canadian REITs outperform US REITs and vice versa. That can drive significant differences in year-to-year category relative performance. Overall, though, the ETF has come out ahead, beating the category average from its May 2010 inception through June 2026 by 1.1 percentage points.
BMO Equal Weight REITs Index ETF: Performance Highlights
This Canada-only portfolio has worked in the ETF’s favor so far. Its 8.4% annualized return beat its average real estate equity peer by 1.1 percentage points annualized from the ETF’s May 2010 inception through August 2025. Volatility was higher, but so was its risk-adjusted return. The ETF’s higher volatility was driven in part by its value tilt and smaller average market cap; both traits tend to lead to more price fluctuations.
Year-to-year performance relative to the category is highly dependent on the performance of US REITs relative to Canadian REITs. The ETF tends to outperform its average peer when Canadian REITs outperform US REITs, and vice versa. In 2015, for example, US REITs outperformed those in Canada, and the ETF underperformed the category by 15.9 percentage points. Canadian REITs outperformed in 2016, and the ETF eclipsed its peers by 16.7 percentage points.
The ETF is not immune to price swings, and its long-term performance is dotted by double-digit returns in both directions. It returned 35.2% in 2021 but lost 23.3% over the following year. Overall performance has been positive, but investors should not expect positive performance over shorter periods.
