John DeGoeyBMO Low Volatility US Equity ETFZLU.TOCOMMENTSep 09, 2013

Canada doesn't have a version of this low-vol with a currency hedge. Now is not a good time to invest in the US. ZLU has outperformed the US market long-term with less volatility.  You get less bad when markets are bad and a little more good when it's good--like it for that.

XST is made up of Canadian retail grocers. Huge weight in Loblaw and Couche-Tard, making up about half of the ETF. Rest will be Metro, Weston, Empire, Saputo, Maple Leaf. Somewhat resilient. No matter what happens in an economy, people need groceries. Less volatility than ZLU.

ZLU is low volatility exposure to a broader cohort of stocks, not just consumer staples. A US play. Lower volatility, but broader economic exposure. Will tend to outperform the S&P 500 in a market correction. Really likes it.

Underperformed the last couple of years. Low volatility was all the rage when we had some corrections. We might have some more corrective action in US stocks, Warren Buffett has a massive cash hoard, Stanley Druckenmiller's calling for 0% growth in US stocks for 10 years. Volatility is tempered with ZLU -- it will go down less in a correction, but up less too. You might decide to stick with this for the long term.

Healthcare at the top, and then pharma and food. When we're seeing an early-cycle move, low vol tends to underperform. At this time, you want more cyclicals and growth. But great if you want low beta.

ZLU is a top choice ETF of the US market -- he believes it is not currency hedged to the CAD dollar. He likes the lower volatility holdings. Good for conservative investors. He also likes the USMV ETF.

No tech stocks, but low volatility with McDonald's and Waste Management. Utilities that pay dividends. Good for waiting and seeing how trade headlines plays out.