ZSP ETF: Can Artificial Intelligence and Inflation Decisions Save S&P 500 From Rate Hike Fallout?

The BMO S&P 500 Index ETF (TSX:ZSP) is one of Canada's most widely held U.S. equity funds, and it enters September at a critical juncture. The fund tracks the S&P 500 Index, giving Canadians exposure to roughly 500 of the largest U.S. companies through a single CAD-listed unit on the Toronto Stock Exchange.

The standard ZSP units are unhedged, so returns incorporate movements in the CAD/USD exchange rate alongside the index. BMO also offers hedged and U.S.-dollar variants for investors who want to manage currency differently.

The AI narrative remains central, propelling the technology-heavy S&P 500. However, the rate backdrop has shifted against richly valued growth stocks, with a hawkish stance under Chair Warsh and a stronger-than-expected U.S. jobs report boosting expectations of a September rate hike.