ZSP (BMO S&P 500 Index ETF) is one of the most-held US equity ETFs by Canadian DIY investors — sitting alongside VFV as the two dominant S&P 500 trackers on Canadian exchanges. Both follow the same index, yet there are real differences in structure, currency treatment, and how they fit your portfolio. Here is everything you need to know.
ZSP is the BMO S&P 500 Index ETF, listed on the Toronto Stock Exchange and priced in Canadian dollars. It tracks the S&P 500 — the benchmark of 500 large-cap US companies that covers roughly 80% of the US equity market by capitalization. ZSP holds the underlying US equities directly and passes dividends through to Canadian unitholders quarterly.
Because it trades on the TSX in CAD, you do not need a USD account to buy ZSP. That convenience makes it a go-to choice for investors at Wealthsimple Trade, Questrade, or Disnat who want broad US exposure without managing currency conversion.
Both ZSP and VFV track the S&P 500, and both are unhedged — meaning your return in Canadian dollars will fluctuate with the CAD/USD exchange rate. At first glance they look identical. The practical differences come down to a few details:
| Feature | ZSP (BMO) | VFV (Vanguard) |
|---|---|---|
| Index tracked | S&P 500 | S&P 500 |
| Currency | CAD (unhedged) | CAD (unhedged) |
| Structure | Direct holdings | Wrapper over VOO (US) |
| Dividend frequency | Quarterly | Quarterly |
| MER | Low — check current rate | Low — check current rate |
| Liquidity | High | High |
The most meaningful structural difference: VFV is a wrapper that buys VOO (Vanguard's US-listed S&P 500 ETF), while ZSP holds the underlying stocks directly. This matters for withholding tax. In a Registered Retirement Savings Plan (RRSP), a fund holding US stocks directly benefits from the Canada-US Tax Treaty, which eliminates the 15% US withholding tax on dividends. A fund-of-funds structure (like VFV wrapping VOO) may not pass that treaty benefit through with the same efficiency. In a TFSA, neither structure escapes withholding tax — the IRS withholds regardless of Canadian account type. For a deeper look at this, see our guide on US dividend withholding tax in TFSAs and RRSPs.
In practice, for most long-term investors the difference in after-tax return between ZSP and VFV is very small. Both are excellent, low-cost ways to own the S&P 500 from Canada. If you hold in an RRSP and care about maximizing dividend efficiency, ZSP's direct-holding structure is a slight edge. If you hold in a TFSA or non-registered account, the gap narrows considerably.
BMO also offers ZUE (BMO S&P 500 Hedged to CAD Index ETF), which tracks the same index but uses currency forward contracts to neutralize the CAD/USD exchange rate movement. This means:
Hedging sounds appealing when the Canadian dollar strengthens — a rising CAD erodes the value of your USD-denominated holdings when converted back. But currency hedging has real costs (the forward contracts are not free) and historically the CAD/USD relationship means hedging has often hurt long-term returns for Canadian investors in US equities, because the US dollar has tended to strengthen versus the Canadian dollar over extended periods.
For most long-term investors, the consensus leans toward unhedged (ZSP) for US equity exposure. Currency diversification itself has value — when Canadian equities struggle alongside a weak Canadian dollar, your US holdings in ZSP act as a partial buffer.
ZSP tracks the S&P 500, which means you are concentrated in US equities — roughly 100% geographic exposure to the United States. Within that, the sector makeup of the S&P 500 as of mid-2026 is heavily weighted toward:
If you hold ZSP alongside a Canadian equity ETF, your total portfolio's geographic and sector exposure may look very different from what the individual fund labels suggest. For example, pairing ZSP with a Canadian bank-heavy ETF creates significant financial-sector concentration. This is exactly why understanding your ETF's geographic exposure matters — and why simply reading a fund's name is not enough.
WealthWise automatically decomposes ETFs like ZSP into their underlying sector weights and maps your real geographic exposure across your whole portfolio, so you can see actual concentration, not just fund labels.
| Account type | US withholding tax on dividends | Capital gains treatment |
|---|---|---|
| RRSP | Waived under the Canada-US Tax Treaty for direct-holding ETFs like ZSP | Capital gains compound tax-deferred |
| TFSA | IRS still withholds 15% on US dividends regardless of account type | Growth and Canadian tax on capital gains are sheltered |
| Non-registered | Taxed as foreign income; foreign tax credit available for withheld amounts | Taxed at your marginal rate on the inclusion amount |
Where you hold ZSP changes your after-tax outcome:
This makes asset location a meaningful decision: holding ZSP in your RRSP is generally tax-efficient, while keeping it in a TFSA or non-registered is perfectly fine — just be aware of the withholding tax drag.
ZSP works well as a core US equity holding in several portfolio styles:
If you already hold XEQT or VEQT (all-in-one ETFs), you already have S&P 500 exposure built in — adding ZSP on top creates unintended overlap and overweights US large-cap. Check your ETF overlap before stacking similar funds.
One of the most useful things you can do as a DIY investor is compare your actual portfolio return against the S&P 500 — not because you should always match it, but because understanding the gap (positive or negative) tells you whether your active tilts, dividend focus, or Canadian home bias are adding or costing value.
WealthWise calculates a true Time-Weighted Return (Modified-Dietz method) for your portfolio and compares it to the S&P 500 benchmark, accounting for your actual cash flows. This gives you an honest answer — not a figure distorted by when you deposited or withdrew money. Learn more about how this works in our article on benchmarking your portfolio vs the S&P 500.
No. ZSP is unhedged, meaning your Canadian-dollar return will rise and fall with the CAD/USD exchange rate. BMO offers ZUE as the hedged equivalent if you want to remove currency risk.
Both track the S&P 500 unhedged in CAD. ZSP (BMO) holds US stocks directly, while VFV (Vanguard) wraps VOO, a US-listed ETF. ZSP's direct structure can be more tax-efficient in an RRSP because it qualifies for the Canada-US Tax Treaty withholding tax exemption on dividends.
Yes. Growth and Canadian taxes on capital gains are sheltered. However, the IRS still withholds 15% on US dividends regardless of account type. Since S&P 500 ETF yields are modest, this cost is relatively small for most investors.
Yes, ZSP distributes dividends quarterly, passed through from the underlying S&P 500 companies. The yield is typically modest since the S&P 500 skews toward growth companies with low payout ratios.
Probably not. XEQT already includes significant US large-cap exposure that tracks the S&P 500. Adding ZSP on top creates overlap and overweights US equities beyond your intended allocation. Check your actual ETF overlap before adding a new position.
Start with WealthWise for free →Educational content. Figures and rules verified against the official sources above; tax amounts change annually.
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