The BMO S&P 500 Index ETF (TSX:ZSP) continues to demonstrate why it is a core holding for many Canadian investors, posting gains of around 11% this year. And over the past five years, it has doubled in value.
This solid performance underscores the exchange-traded fund's ability to capture the growth of the U.S. market, driven by heavyweights in the technology sector like NVIDIA, Apple, and Microsoft. With net assets swelling to over $21 billion, it has become one of the most popular vehicles for accessing American equities from the Toronto Stock Exchange.
For investors using a Tax-Free Savings Account (TFSA), this ETF offers a compelling strategy for long-term wealth accumulation. The primary advantage of holding this fund in a TFSA is the complete shelter of capital gains from Canadian taxes. Since the S&P 500 has historically delivered strong price appreciation, the tax savings on this growth can be substantial over time.
Cost efficiency is another major reason to buy this ETF. With a management expense ratio of just 0.09%, the fund is one of the cheapest ways for Canadians to diversify their portfolios with U.S. exposure. This low fee structure ensures that the bulk of the market's returns remain in your portfolio, compounding over the years.
Given its low cost, high liquidity, and exposure to world-leading corporations, this ETF is a suitable buy for growth-oriented investors and those looking to maximize the tax-free ceiling of their registered accounts. This can be an ideal investment to hold in your portfolio for decades, as it can be an excellent pillar to build around.
