On Friday, the Federal Reserve Chair Janet Yellen said that a summer rate hike was a possibility. The minutes of the Fed’s most recent monetary policy meeting suggest that the central bank is open to a rate hike in June itself. The hawkish stance from the Fed is a negative for equities. However, investors can still consider low volatility large cap stocks. Canadian investors can get exposure to U.S. low volatility stocks through the BMO Low Volatility U.S. Equity Index ETF (TSX: ZLU).
The fund seeks to provide unitholders with exposure to the performance of a portfolio of U.S. stocks with potential for long-term capital growth. The securities in the fund are selected from the large capitalization U.S. equity universe.
Year-to-date, ZLU has been essentially flat. Over the last one year though, the ETF has returned nearly 15%, outperforming the S&P/TSX Composite Index, which has fallen more than 6% in the same period. The fund’s performance in the last five years has been even more impressive. ZLU has gained more than 91% in the last five years, compared to a gain of just over 10% for the S&P/TSX Composite Index.
