John HoodiShares MSCI Canada Minimum VolatilityXMV.TOPAST TOP PICKAug 04, 2016

If tech falls, say 20%, a low vol will fall 10% roughly. Likes XMV. Top holdings are TD, National Bank, BNS and Royal. Lots of banks. Staples and consumer staples are also low-vol.

With ZLB, you get similar or better returns with less risk, beta, volatility. Well constructed product. Skews more to certain sectors like utilities and financial services, so you'll see underperformance. For 5-10-15-20 years, it's a thoughtful way to get returns from the market. XMV creates a portfolio of minimum volatility. You could use these 2 ETFs together.

Minimizing volatility is the name of the game and this is why he chose this. He is not really enthusiastic about the Canadian market, but at the same time doesn’t want to be out of it. The problem with this type of ETF is that they are so defensive in terms of REITs, utilities, etc. that the Price to BV are around 4X and the PE ratios are very, very high. iShares came out with this and the PE is around 18-19 and Price to BV is around 1.8-2. It has an overweighting in financials that the others don’t. The track record on this has been pretty good. Also this one is cheaper.

ETF Cdn$ Hedged, low volatility with US based companies? Both iShares (iShares MSCI Cdn Min Volatility (XMV-T)) and Bank of Montréal (BMO Low Volatility US (ZLU-T)) have one. For someone shy of volatility, either of these are very good choices.

This is quite new and he likes the concept of getting a lower beta portfolio i.e. less volatile. It’s a new product, so don’t expect miracles. There will be light volume on it because people are just getting used to these things.