CapitalTime

Articles on investing and capital management, with a quantitative focus.

#prp - Permanent Risk Parity (how I invest)

Switching to ZGLD

2026-02-28

I switched my portfolio’s gold ETF to ZGLD, a new gold bullion ETF from BMO Asset Management. This replaces CGL.C in my Canadian PRP.

Both ETFs track gold perfectly well, and store the gold bars in Canada. The 0.23% MER offers a significant reduction in fees!

I watched ZGLD for a while

I watched ZGLD (with occasional spot checks) over 1.5 years, to make sure that it was behaving properly and tracking gold accurately. In particular, I monitored the mid-point between the “bid” and “ask” prices.

This mid-point seems to track the price of gold (in CAD) quite well. Additionally, I saw ZGLD outperform CGL.C due to the lower MER.

The bid/ask spread in ZGLD is typically around 5 cents, but I have seen it as wide as 10 cents when gold is moving like crazy.

The true spread might not actually be so wide. Canadian brokerages usually only show quotes from the TSX marketplace, which doesn’t show the full liquidity offered by all of the other marketplaces (like MatchNOW and Nasdaq Canada). The good brokerages will route orders to any of these exchanges, and there is almost always better liquidity than what you see in the quote.

Even when the bid/ask spread looks wide, I find that a limit order placed at the mid-point (average) of the “bid” and “ask” usually gets filled.

Overall portfolio MER

With this change, the weighted average MER of my risk parity portfolio has declined to just 0.14%, entirely using Canadian ETFs that trade on the domestic exchanges.

Tax considerations

Inside tax-sheltered accounts, I immediately switched ETFs because there are no capital gains taxes. However, my taxable account continues to hold CGL.C because selling this would trigger capital gains taxes.

If gold crashes or has a severe correction at some point, that would be a good opportunity to sell and switch ETFs, due to lower capital gains.

— Jem Berkes