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Opinions Mike S. Newton, CIM FCSI
BMO Low Volatility Cdn Eqty ETFZLB.TOCOMMENTMar 31, 2014
Stock price when the opinion was issued
As of Jun 18, 2026. Market Open.
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Portfolio of low-beta stocks. Consumer staples, some financials, utilities. MER is 39 bps, not exactly cheap but not overly expensive. For the investor looking for dividends plus a low ride in the equity market.
Consumer staples and utilities in Canada aren't cheap right now, as people flock to safety. At some point, investors will move away from the safe stuff and more into risk-on equities like technology, financials, and industrials. He's not in the recession camp right now, so he wouldn't want to hold a big chunk of consumer staples.
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. Try XMV, which creates a portfolio of minimum volatility. You could use these 2 ETFs together.
David CockfieldDavid Cockfield
David Cockfield
One worry he had with low volatility ETFs, certainly through the summer of last year, was that it was one of the biggest inflows from the ETF industry from both Canada and the US. You get a little bit worried that there is too much money chasing something. This is a strategy that is really good for very, very long periods of time. A well-established idea. There have been studies showing that low volatility stocks can actually outperform high volatility ones. Where the math works is the idea of the compounding and the ability to have shallow declines in the market. Secondly, the anomaly works by the rebalancing of the 40 lowest names and reconstituting them 2 times a year. Great ETF to own in a TFSA or a small LIRA etc.