Investing · ETF deep dive
ZFL BMO Long Federal Bond Index ETF
Not an income fund — a 17-year-duration interest-rate instrument wearing a bond ETF costume. Powerful in the right hands, violent in the wrong ones.
Best for: Deliberate duration-takers: recession hedgers, liability matchers, and barbell builders who know exactly why they’re here
Pros
- 100% Government of Canada — zero credit risk, AAA 99.9%
- Duration 17.1: the biggest rate-fall payoff available in a plain Canadian fund
- YTM 3.88% — the highest of our seven
Cons
- Duration 17.1 cuts both ways: a one-point rate rise costs ~17% of price
- The only fund here BMO itself rates Medium risk (the others are Low)
- 0.22% MER — double the aggregates — and 22 holdings of concentration
What's inside ZFL
| Underlying fund | Weight |
|---|---|
| Gov of Canada 3.50% 12/2057 | 21.7% |
| Gov of Canada 2.00% 12/2051 | 17.0% |
| 20 other long federal issues | 61.3% |
Federal government 100% · AAA 99.9% — the purest credit book in Canada (Provider tables, Jun 9, 2026) · holdings as of June 9, 2026 (22 holdings)
The deep dive
ZFL holds 22 long Government of Canada bonds — average term 26 years, duration 17.1 — which makes it less an income product than a pure interest-rate position. If long yields fall one point, ZFL gains roughly 17%; if they rise one point, it loses the same. BMO’s own risk rating says the quiet part: Medium, where every other fund on our pages is Low.
Used deliberately, it’s a precision tool: the classic recession hedge (long federals historically rally when equities crash on growth fears), the liability-matcher for far-off obligations, the long end of a barbell against VSB. Used accidentally — bought for its 3.88% YTM by someone wanting “safe bonds” — it’s how investors discover what duration means. Note also the yield display: distribution yield 2.70% vs YTM 3.88%, because the portfolio’s coupons are below today’s yields; the rest accrues in price.
The rest of the field
The rest of the field, one line each:
- ZAG — the $12.8B aggregate, 0.09% MER
- XBB — same index as ZAG, since 2000
- VAB — Bloomberg float-adjusted aggregate
- ZDB — the tax-aware aggregate for taxable accounts
- VSB — short-term (2.7yr duration)
- XSB — short-term (2.8yr duration), since 2000
Frequently asked questions
What does ZFL hold?
ZFL holds 22 long-term Government of Canada bonds — led by Gov of Canada 3.50% 12/2057 at 21.7%, Gov of Canada 2.00% 12/2051 at 17.0%, 20 other long federal issues at 61.3% (as of June 9, 2026 (22 holdings)). Credit and sector mix: Federal government 100% · AAA 99.9% — the purest credit book in Canada (provider tables, jun 9, 2026). Weights drift between rebalances — ftse canada long term federal bond index (>10yr, aaa) · duration 17.11 yrs · risk rating: medium.
What does ZFL cost?
Currently 0.20% management fee; 0.22% published MER (page as of Jun 9, 2026). Canadian aggregate bond ETFs now cost just 0.09%–0.10% — specialty rungs more (ZFL 0.22%) — see the full comparison. At bond-level expected returns, every basis point matters: the MER calculator shows why.
Which account should hold ZFL — and should it be a GIC instead?
Bond interest is fully taxed at your marginal rate, the least favourable treatment there is — so bond ETFs belong in an RRSP, RRIF or TFSA first (the deliberate exception is ZDB, engineered for taxable accounts). And before buying any bond fund for dated money, run the honest comparison: our live GIC table often pays more than a bond ETF's YTM with zero price risk — the fund's advantages are daily liquidity and gains if rates fall. The bonds guide walks the full decision.
The bottom line
Own it on purpose or not at all. For an actual income sleeve, the aggregates do the job; for guaranteed long-dated money, 5-year GICs currently out-yield it without the rollercoaster.
This page is for educational purposes only and is not investment advice. Fund facts were verified at BMO ETFs's published fact sheets and product pages on June 10, 2026; holdings and weights are point-in-time and drift between rebalances; published MERs may lag recent fee changes (page as of Jun 9, 2026). We deliberately do not compare or project returns. Read the fund facts document before buying. See our methodology.