Global equity markets saw significant volatility at the start of this year as a range of factors, including a slowdown in China and collapsing oil prices, weighed down investors’ sentiment. While equities are generally seen as risk assets and therefore expected to take a hit in volatile times, there are some defensive sectors within the equities space that can provide stability in times of volatility. While markets have stabilized somewhat in recent weeks, it would be prudent for investors to include defensive stocks in their portfolio.
Utilities are traditionally seen as defensives. While the low beta sector does not provide much upside when the market is doing well, it does help in preserving capital in times of turmoil. Canadian investors looking to gain exposure to the utilities sector should consider adding BMO Equal Weight Utilities Index (ETF) (TSX: ZUT) to their portfolios.
The fund has been designed to replicate the performance of an equal weight utilities companies index, net of expenses. The fund seeks to invest in and hold the Constituent Securities of the Dow Jones Canada Select Equal Weight Utilities Index. Year-to-date, ZUT has gained 3.78%. The ETF currently offers a yield of 4.55%.
