BMO Low Volatility US Equity ETF (ZLU.TO)

(A Top Pick May 22/15. Up 17.23%.) This is a way to get into the US. It has benefited from the low Cdn$.

Chart shows it has been going sideways, but that is at a time where the rest of the market was actually going down. Thinks it is back in a situation where we are going to see it going up. This is very much consumer oriented. They have 25% utilities, 24% consumer staples, 17% healthcare and 10% consumer discretionary.

Low volatilities have exploded ever since the launch of PWSH S&P 500 Low ETF (SPLV-N). BMO’s spin on this has been very good and has outperformed quite a lot with everyone wanting US$s. With the recent action in the Cdn$ going down, and the contemplation that the US$ could depreciate, BMO and many others launched currency hedged versions such as Low Volatility US Equity Hedged (ZLH-T). This is a call on whether you think the US$ is going to go up or down.

BMO has a great suite of ETF’s. This one has done very, very well. You can buy this and set it aside, and you are going to do well.

(A Top Pick Feb 18/15. Up 16.79%.) Has a lot of US retail, consumer durables, healthcare, etc. A domestically oriented low beta ETF. A part of the US economy that will do reasonably well and not be affected by the high US$.

Expense ratio is quite reasonable at 3.4%. It owns 26% utilities, 26% consumer staples, 19% healthcare and 11% consumer discretionary. Has a good distribution within the US economy. These are low volatility stocks.

This has very low volume and volume is very important. Technically ETF providers will tell you that the underlying benchmark or Index is key as to whether you can get liquidity in the market, from the standpoint of being able to redeem or create, but we are not in that market, so the next is the secondary market. He doesn’t Buy ETF’s that don’t trade actively every day.

Has $41,000. 3 ETF’s for growth and dividends to put into a TFSA account? This is a low volatility one from the US that he would suggest. Their concept on this is that you are buying stocks that have low beta.

This is a way to participate in a broad base. Their beta is .76. It has 25% utilities, 25% consumer staples, 20% in healthcare and 10.9% in consumer discretionary. These are companies that are not particularly multinationals, which is what he wants. Feels the high US$ has hurt some of the big multinationals. These tend to be more domestic.

Low volatility stocks have not done as well as some of the higher volatility stocks, which would typically be your momentum plays. Low volatility products have tended to underperform, which may continue for awhile. Until we get higher rates and more volatility that is when you want to be in this type of product.

Hasn’t done much recently, and is probably in a Buy range. They hold 25% utilities, 25% consumer staples, 20% healthcare and 12% consumer discretionary, so these are broad-based US companies towards the consumer side. Focused somewhat away from multinationals. Still thinks the US$ will continue to be strong. Good diversification.

This has been down 3 straight sessions, and today’s drop was a fair size. This is US stocks denominated. It works against you if the Cdn$ rallies to the US$. The dollar has gone from $1.27 to $1.23, which makes up a big chunk of the reversal of this ETF. Nothing wrong with the name and he thinks it is a terrific name. He wouldn’t get concerned with any short-term moves.

Although this is a US ETF, you buy it in Cdn$. This is a broad-based ETF of US domestically oriented stocks. It diversifies you out of Canada, but he sees the US economy outperforming the Canadian one.

Beta is market risk. The market has a beta of 1.0. ZLU-T has been designed to have lower market volatility. It does not participate necessarily in strong increases in the marketplace. It can, however, sometimes outperform a bull market. The healthcare sector has recently caused it to outperform.

These products are promoted as not having as much upside in a bull market, but will limit the downside if the market turns negative. He tends to not use low volatility products, but he is starting to reconsider his position. This is a value proposition that is worth exploring, especially if you would find comfort in any kind of a potential of a downturn.