It should be of no surprise to readers that BMO’s Low Volatility ETF (ticker ZLB-T) is greatly outperforming the TSX in 2025. The ETF is designed to outperform during times of market volatility. ZLB is rising to the occasion once again. As I have long suggested it might be the best core Canadian equity ETF available, especially for retirees. The index has a long history of outperformance that goes well beyond the life of the ETF, from 2011. Better returns with less risk; what’s not to like? Low volatility outperforms on the Sunday Reads.
2025 has been a wild ride thanks to the new inhabitants in the White House, and the on-again, off-again global trade war. That said, ZLB’ers have hardly noticed.
AT the end of 2024, before 2025 moved into WTF is going on? I offered Hell0 2025, investing in the zero visibility age. I observed that 2024 was a year that fooled everyone and it followed 2023 a year that fooled everyone. Notice a trend here? 🙂
From that 2024 post …
Proposed Trump tax cuts and looser regulations will battle with inflationary tariffs and deportations. … Both stocks and bonds are repricing Trump. But Trump is like a box of chocolates – you don’t know you will get.
2025 not so groovy
And just days before Trump took office – The world changes on Monday. Mike Myers made an appearance …
In an act of clairvoyance I knew that Mike would lead the elbows up charge for Canada. It’s a Scarborough thing. We fight first. And yes, Canadian oil and gas did get a tariff exemption – a full tariff carve out. Ya see, America does need our oil and gas.
And over a month ag0 I penned – managing risk in the age of uncertainty. Of course, you’ll find ZLB-T and lower volatility sectors XST-T / ZUT-T mentioned in that post
Check out the GIC rates at EQ Bank
In early March we were playing defence with Canadian utility stocks and ETFs.
In early February I asked why bonds get no respect. I guessed bonds (XBB-T) would do their thing in the next correction. They’re up over 6% (including distribution) from the time of that post. And as a ‘warning’ or clarification …
Bonds almost always rise to the occassion – they go up in price when stocks stink the joint out. But inflation is like kryptonite to bonds.
On February 9, I warned again about the over valuation issue for U.S. stocks. ZLB made another appearance in the post, BTW. Expensive tech in the U.S. moved into a bear market as international stocks started to greatly outperform U.S. stocks. Quite simply, a global balanced portfolio has been up to the task. But you would have been able to manage risk much better with some low volatility and defensive sector assets. They are often one in the same.
Let’s take a look at the BMO Low Volatility ETF vs the TSX Composite
head to head comparison to date, not including dividends.
Here’s the performance for ZLB to the end of March 31, 2025. Risk? What risk?
While the index finds low volatility stocks in many sectors, it does overweight in consumer staples, utilities and communication services (telcos). Findings some good gold stocks (materials) helps the cause as well.
You can check out the individual stock holdings on the BMO page.
U.S. Low Volatility
On Seeking Alpha I looked at the first quarter of 2025.
S&P 500 posts worst quarterly performance since 2022. The U.S. Dollar falls 5%.
We see low volatiliy leading the way south of the border as well.
Include gold and I identified (well in advance) the top 5 performing assets in 2025. It’s the kind of risk management we discuss at Retirement Club. Risk is unique in retirement. Knowing how to manage risk is crucial. We are filling up the last few spots for Retirement Club Two. It sets sail in 12 days. Use Contact Dale if you’d like to sign up (small fee) or if you’d like more information. There are Zoom presentations, newsletters and a secure and private online community where we learn, share and connect.
In that Seeking Alpha article I also offered a look at our own defensive U.S. stocks in the first quarter. Nice …
More Sunday Reads
At Banker on Wheels how to bulletproof your portfolio.
In the mix from BoW is the most ‘stockproof’ portfolios by stock market (country). Here’s a sample. We see that the Canadian market is one of the most resilient and that the answer was the permanent portfolio. It likely has not been studied, but I’d suggest the permanent portfolio would have been made even better with low volatility Canadian stocks in the mix.
Here’s what a permanent portfolio looks like …
Dividend Hawk takes a look at his portfolio for the week. We shared in some CNQ-T dividends, and Hawk added to his Canadian National Railway CNR-T while it is out of favour. Some nice long term value hunting.
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At Findependence Hub, how financial independence can reshape your definition of success and mental health. That’s a good read. Also at the Hub, surviving a bear scare in retirement.
At Retirement Club this week I started a space (a thread) on using a cash pile to manage that risk. Admittedly, it can be a useful mental accounting trick as much as a financial risk hedge.
Dylan at Stocktrades also looked at lower risk Canadian stocks this past week. That’s a good 5-pack starter set 😉
Bob at Tawcan looks at his stock transactions in 2024.
And while stock markets had a good week, Isabelnet reminds us that U.S. investors are not in a good mood.
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