BMO S&P/TSX Capped Composite Index ETF (TSX:ZCN) Attracts Cost-Focused Investors as Canadian Stocks Outpace Global Peers

Key Highlights

• TSX:ZCN tracks the S&P/TSX Capped Composite Index, holding roughly 220 Canadian stocks with a 10% cap on any single company.
• Approximate AUM is in the C$12–14 billion range, supported by one of the lowest fees in Canadian equity ETFs.
• The TSX was up roughly 14% year to date in early September, outpacing the S&P 500 and most major global indexes.
• Gold miners, energy producers and banks have been the key engines of Canadian market leadership in 2026.
• Rising bond yields, tariff escalation and the October 28 Bank of Canada decision are central watch points.

Fund Snapshot

Fund Objective and Benchmark

The BMO S&P/TSX Capped Composite Index ETF (TSX:ZCN) seeks to replicate, net of expenses, the S&P/TSX Capped Composite Index. This benchmark covers about 95% of Canadian equity market capitalization while capping any single constituent at 10%, a feature designed to prevent one stock from dominating the portfolio, as happened with Nortel decades ago.

With a management expense ratio of around 0.06%, TSX:ZCN is one of the cheapest ways to own the entire Canadian market, which explains its popularity in core portfolios, registered accounts such as TFSAs and RRSPs, and model portfolios built by advisors.

Why TSX:ZCN Is Trending Now

Canadian equities have been one of 2026's quiet success stories. The S&P/TSX Composite climbed to record highs near 37,000 in late August, and by early September its year-to-date gain of roughly 14% placed it ahead of the S&P 500. Strength has been broad: gold producers rallied with record bullion prices, energy companies benefited from elevated crude linked to Middle East tensions, and the Big Six banks each beat third-quarter earnings expectations.

Fee competition is another driver. In a Canadian ETF industry now above C$920 billion in assets and on pace for record annual inflows, investors continue to gravitate toward ultra-low-cost broad market trackers, and TSX:ZCN sits squarely in that group alongside its main rivals.

Sector Allocation

• Financials: about 32%–34%
• Energy: about 15%–17%
• Materials: about 14%–16%
• Industrials: about 11%–12%
• Information technology: about 9%–10%
• Utilities, communication services, consumer staples, consumer discretionary and real estate: remainder

Geographically the fund is fully Canadian-listed, while capturing companies with large global revenue streams.

Top Holdings

Major positions typically include Royal Bank of Canada, Shopify, Toronto-Dominion Bank, Enbridge, Brookfield Corporation, Agnico Eagle Mines, Bank of Montreal, Bank of Nova Scotia, Canadian Natural Resources, Canadian Pacific Kansas City, Constellation Software and Barrick Mining. Beyond the top names, the mid-cap tail adds exposure to gold and base metal miners, REITs and regional industrials that the narrower TSX 60 omits.

What Investors Can Watch Going Forward

• Bank of Canada: the overnight rate is at 2.25%, but with headline CPI at 3.0% in August and Q2 GDP growth of about 3.3% annualized, a hike is back on the table at the October 28 or December meetings.
• Bond market: Canada's 10-year yield approached 4% in late September, a near three-year high, which can weigh on utilities, REITs and telecoms.
• Trade: Canada's counter-tariffs on US goods and possible US retaliation could hit manufacturers and consumer sentiment.
• Commodities: gold and oil remain powerful swing factors for the materials and energy weights.
• Employment: August jobs fell by about 41,700, a reminder that domestic growth is uneven.

Bottom Line

TSX:ZCN offers broad, diversified and very cheap Canadian equity exposure at a time when the domestic market is outperforming. Investors should watch rates and trade headlines closely, but the fund remains a strong core holding candidate. Figures are approximate; confirm details with BMO before investing.