BMO Floating Rate High Yield ETF (ZFH.TO)

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The BMO Floating Rate High Yield ETF offers investors a way to access speculative-grade debt while keeping sensitivity to interest rate shifts at a minimum. A key component of its strategy involves allocating capital to short-dated Canadian bonds, a measure designed to mitigate both interest rate and currency fluctuation risks. To amplify its potential earnings, the fund employs credit default swaps (CDS) to achieve broad exposure to a diverse collection of non-investment grade, high-yield companies based in the United States. Utilizing CDS for this exposure provides several advantages, such as the reliability of central clearing, strong market liquidity, clear price discovery, safeguards against counterparty risk, and thorough regulatory supervision.