The S&P/TSX Index has increased 3.8% in 2017 and 6% year over year. Canadian bank stocks have powered the index since impressive banking earnings in late August boosted investor sentiment, but there are clouds on the horizon. Statistics Canada released a report showing flat GDP in July, breaking a streak of gains dating back eight months. It also posted a report on October 20 that showed retail sales had slowed in the late summer.
Investors who are concerned about coming volatility should look at the BMO Low Volatility Canada Equity ETF (TSX:ZLB). This exchange traded fund invests heavily in financial services, consumer defensive stocks, Canadian utilities, real estate, and communication services. Some of its top holdings including Hydro One Ltd., Waste Connections Inc., and Fairfax Financial Holdings Ltd.
The ETF has climbed 7.8% in 2017 and 7% year over year. The International Monetary Fund has boosted expectations for Canadian growth in 2017 and 2018 but signs are emerging of a possible retreat. New mortgage regulations brought in by the OSFI could cool the housing market even more heading into 2018. The oil and gas industry will also continue to contend with low prices and stagnating investment.
Investors who have tempered their outlook for the Canadian economy heading into next year should consider this ETF. Since launching in November 2011 it has returned 102% and is a great option for those expecting a broader slowdown.