The markets have been very volatile lately, and one way that investors can protect themselves is through diversification.
However, rather than holding shares of multiple stocks or trying to have coverage in various different industries, an easy way to accomplish all of that is just by investing in a single ETF to mirror the market’s returns.
While you won’t earn sky-high returns, you also can know that your investment will be as stable as the market. And while there might be volatility over the short term, over the long haul you know your investment will likely grow in value.
For Canadian investors, the idea of mirroring the market might not be that encouraging given how lacklustre the TSX has been over the years.
The good news is that you don’t have to settle for the TSX and can instead buy the BMO Dow Jones Industrial Average Hedged to CAD Index ETF (TSX:ZDJ). The ETF has done an excellent job over the years of providing investors with a good mix of equities to ensure that its returns are similar to those of the Dow Jones.
In five years, the ETF has risen by about 48%, a little under the 52% returns that the Dow Jones has produced over the same period of time. The returns are highly correlated and the ETF has averaged a 36-month beta of just 1.09, moving very closely with the market.
Overall, it’s an easy way for investors that may not be sure what to invest in to put their money into one safe ETF that can help their portfolios rise in value.
