zdj stock: BMO Dow Jones Hedged ETF

This article explains zdj stock — the BMO Dow Jones Industrial Average Hedged to CAD Index ETF (ZDJ) — covering its objective, index method, holdings, risks, fees, performance drivers and where inv...

2024-07-06 05:20:00

By Cyber Fusion

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ZDJ (BMO Dow Jones Industrial Average Hedged to CAD Index ETF)

zdj stock refers to the BMO Dow Jones Industrial Average Hedged to CAD Index ETF (ticker ZDJ), an exchange‑traded fund listed on the Toronto Stock Exchange that provides Canadian dollar hedged exposure to the Dow Jones Industrial Average. This guide explains what the fund tracks, how the currency hedge works, the portfolio composition and the practical considerations for Canadian investors who are researching zdj stock.

Overview

zdj stock is designed to give Canadian investors direct economic exposure to the US Dow Jones Industrial Average (DJIA) while neutralizing USD/CAD currency fluctuations through a hedging overlay. The fund is appropriate for investors seeking passive exposure to 30 leading US large‑cap companies without taking foreign exchange risk. This overview explains the fund’s purpose, typical investor uses and the distinguishing feature of a CAD currency hedge.

Fund details

Issuer and management

The fund is managed and distributed by BMO Global Asset Management (BMO Asset Management), part of the Bank of Montreal group. BMO manages the ETF’s replication of the underlying index, handles the currency‑hedging overlay, provides investor materials and maintains regulatory filings for zdj stock.

Ticker and exchange

zdj stock trades on the Toronto Stock Exchange (TSX) in Canadian dollars under the ticker symbol ZDJ. Market data sites may show variations such as ZDJ‑T or ZDJ‑CA to indicate the TSX listing or CAD pricing, but the primary TSX ticker is ZDJ.

Inception and structure

The ETF is a Canadian‑domiciled exchange‑traded fund structured to track a Canadian‑hedged version of the Dow Jones Industrial Average. Exact inception date and legal trust structure are documented in the fund’s prospectus and on the issuer product page. As of 2026-01-25, according to the issuer product documentation, the ETF operates under Canadian regulatory filings and follows ETF trust conventions common to TSX‑listed funds.

Investment objective and strategy

The stated objective of zdj stock is to replicate, to the extent possible, the performance of the Dow Jones Industrial Average Hedged to CAD Index, net of expenses. The ETF uses a passive, index‑tracking approach and implements a currency hedge to minimize the impact of USD/CAD exchange rate movements on returns for CAD‑based investors.

Key elements of the strategy include:

Passive replication of the hedged DJIA index (aiming to match index returns rather than outperform).
Use of either direct full replication (holding all 30 index constituents) or a sampling method if operationally necessary.
Implementation of a currency‑hedging overlay (typically using forward foreign exchange contracts or other hedging instruments) that aims to neutralize USD exposure back to CAD on a defined rebalancing schedule.

Index methodology

The underlying benchmark tracked by zdj stock is the Dow Jones Industrial Average (DJIA), adjusted with a CAD‑hedging overlay. The DJIA is a 30‑stock, price‑weighted index of major US blue‑chip companies. Price‑weighting means each company’s influence on the index is proportional to its share price, not its market capitalization, which leads to distinct exposure characteristics compared with market‑cap weighted indices.

Price‑weighting implications:

Companies with higher share prices have greater index influence, even if their market capitalization is lower than peers with lower share prices.
Corporate actions (splits, special dividends) and regular reconstitutions can change index weights and therefore the ETF’s holdings and exposures.

The currency‑hedged version of the index overlays foreign exchange hedges that aim to eliminate the direct impact of USD/CAD moves on total return. Hedge implementation frequency and approach are defined by the index methodology and the ETF manager’s operational policies.

Portfolio composition and holdings

Holdings and sector exposure

zdj stock provides exposure to the 30 large U.S. companies that make up the Dow Jones Industrial Average. Typical sector exposures reflect the DJIA composition: financials, industrials, information technology, health care, consumer discretionary and communication services are commonly represented.

Because the DJIA is concentrated in 30 large‑cap names, zdj stock generally has relatively high single‑name and sector concentration compared with broad US market ETFs that include hundreds or thousands of constituents.

Weighting and rebalancing

The DJIA’s price‑weighting determines each constituent’s weight based on share price. As a result, rebalancing and corporate actions can change the ETF’s effective exposures quickly. The ETF follows the index reconstitution and rebalancing schedule; managers may also rebalance the currency hedge on a regular timetable (e.g., monthly or quarterly) per the fund’s policy.

Key statistics

Investors evaluating zdj stock should review live fund metrics on the issuer page and major market data providers because these figures change over time. Typical metrics to check include assets under management (AUM), expense ratio, indicated distribution yield, NAV per share, shares outstanding and daily average trading volume.

As of 2026-01-25, according to the fund facts available from the issuer and major market data sites, investors should consult BMO’s product page and recognized market sites for the latest AUM, expense ratio and yield for zdj stock. These platforms also provide historical NAV series, distribution history and share count information for validation.

Performance

Historical returns

Historical performance for zdj stock tracks the hedged DJIA index net of fees. Over periods when the USD appreciates against the CAD, an unhedged US equity investment may show higher CAD returns than the hedged ETF; during USD weakness, the hedged ETF can outperform in CAD terms because the hedge eliminates currency losses. Performance charts and cumulative return tables are available from the issuer and market data providers for specific time windows.

Tracking error and factors affecting performance

Tracking error is the deviation between the ETF’s returns and the target hedged index. Primary contributors to tracking error for zdj stock include:

Management fees and operating expenses deducted from fund assets.
Hedge effectiveness and hedging costs (roll costs, bid/ask for FX forwards, basis difference between hedging instruments and spot rates).
Dividend treatment and timing: differences in how the index treats dividends and how the ETF receives and processes distributions can create divergence.
Implementation method: full replication tends to reduce sampling error; sampling or optimization can introduce additional tracking variance.
Transaction costs and slippage from rebalancing and large flows affecting the ETF’s trades.

Distributions and taxation

zdj stock typically distributes investment income, which can include dividends received from US companies (converted to CAD after hedging effects). Distribution frequency and classification (income vs. capital gains vs. return of capital) are reported in the ETF’s distribution documentation and tax reporting materials.

Tax treatment depends on investor jurisdiction and account type. Canadian investors should consult tax guides specific to Canadian ETFs and consider whether distributions are eligible for dividend tax credits or subject to withholding. As of 2026-01-25, according to issuer tax documents and standard Canadian tax guidance, investors should review the ETF’s annual tax reporting statement and consult a tax professional for their personal situation.

Risks

Key risks associated with zdj stock include:

Market risk: exposure to the US large‑cap equity market means zdj stock is sensitive to broad market movements and the performance of the 30 DJIA constituents.
Index‑specific risk: price‑weighted indices like the DJIA behave differently from market‑cap weighted benchmarks; price moves in a small number of high‑priced shares can disproportionately affect returns.
Currency and hedge risk: while the ETF seeks to hedge USD/CAD exposure, hedge effectiveness is not guaranteed; basis risk and costs of hedging can produce residual currency impact.
Concentration risk: with only 30 holdings, sector or single‑stock concentration is higher versus broader index ETFs and can increase volatility.
Liquidity and spread risk: trading liquidity on the TSX and bid‑ask spreads can affect execution costs, particularly for large orders or in turbulent market conditions.
Tracking error risk: fees, hedge costs and operational frictions can cause performance divergence from the hedged index.

Fees and trading considerations

Fees and trading considerations for zdj stock are important for total return outcomes. The ETF charges an expense ratio that covers management and operational costs; this fee reduces gross index returns and contributes to tracking error. Because zdj stock trades in CAD on the TSX, Canadian investors avoid conversion at trade time when buying or selling shares in CAD, but the fund’s hedge maintenance may involve FX instruments internally.

When trading zdj stock, investors should consider:

Bid‑ask spreads: tighter spreads typically mean lower implicit trading cost.
Daily volume and market depth: higher average volume improves execution for larger orders.
Use of limit orders vs. market orders: to control execution price and avoid paying wide spreads.
Natural currency exposure of the ETF: even though the ETF is hedged, investors should understand the fund’s stated hedge ratio and rebalancing cadence.

Comparison with similar ETFs

zdj stock can be compared with unhedged US large‑cap ETFs and other DJIA‑tracking ETFs in terms of currency exposure, index methodology and expense profile. For Canadian investors concerned primarily about CAD returns, a CAD‑hedged ETF like zdj stock helps neutralize exchange rate volatility, whereas an unhedged ETF exposes investors to currency swings.

Comparative considerations include:

Hedged vs. unhedged: hedged ETFs reduce currency risk but may incur additional costs or roll friction related to hedging instruments.
Index weighting: DJIA (price‑weighted) vs. S&P 500 or TSX composite (market‑cap weighted) — weighting affects concentration and risk characteristics.
Expense ratios and liquidity: compare fees and trading liquidity to choose the most cost‑effective instrument for the desired exposure.

Investor suitability

zdj stock may be suitable for Canadian investors who want direct economic exposure to the Dow Jones Industrial Average while minimizing USD/CAD exchange risk. Typical investor profiles include:

Passive, long‑term investors seeking broad blue‑chip US exposure without FX volatility.
Investors using the ETF as a building block for diversified portfolios where USD currency exposure is undesired.
Advisors constructing CAD‑based model portfolios that prefer hedged US equity exposure.

zdj stock may be less suitable for investors who:

Want speculative currency exposure to USD (those investors may prefer unhedged US ETFs).
Prefer broader US market coverage than the 30‑stock DJIA offers.
Seek exposure to small‑cap or sector‑specific US equities not represented in the DJIA.

Historical price data and market listings

For up‑to‑date historical prices, daily NAV, charts and market data for zdj stock, consult the ETF issuer product page and market data providers. As of 2026-01-25, according to market platforms and the issuer, historical price series and trading metrics are available from the TSX market data feed and recognized financial information services.

Sources where investors can view live data include the fund facts on the issuer’s website, major financial data terminals and widely used charting services. These sources report daily NAV, historical returns and distribution history that are necessary to evaluate zdj stock performance over specific time periods.

References

Primary information sources used in preparing this article include the ETF issuer product page and leading market data providers. As of 2026-01-25, the following sources were referenced for fund documentation, profile data and market quotes:

BMO product page — BMO Dow Jones Industrial Average Hedged to CAD Index ETF (issuer documents and fund facts), reported 2026-01-25.
Morningstar ETF profile for ZDJ, reported 2026-01-25.
Barchart ZDJ.TO profile, reported 2026-01-25.
CNBC quote page for ZDJ-CA, reported 2026-01-25.
TradingView TSX:ZDJ overview, reported 2026-01-25.
TipRanks ETF page, reported 2026-01-25.
The Globe and Mail market page for ZDJ-T, reported 2026-01-25.
Markets.com quote page for ZDJ_TO, reported 2026-01-25.
StockAnalysis TSX:ZDJ historical data, reported 2026-01-25.

Note: fund metrics such as AUM, expense ratio, indicated yield and NAV change over time; consult the issuer and market data providers for real‑time figures before making decisions related to zdj stock.