The stock market has been rallying this year but there's uncertainty ahead and the potential for a crash or correction around the corner, especially given how hot some stocks have been. And while exchange-traded funds (ETFs) can offer some diversification, many of them still have too much exposure to top tech stocks. If they fall, so too could the ETFs.
That's where the BMO Low Volatility Canadian Equity ETF (TSX:ZLB) may be a more attractive option, as its focus is on low-beta Canadian stocks. Beta is a measure of how volatile a stock is relative to the market. And rather than chasing the winners, it gives investors a safer and less volatile mix of stocks.
It includes around 50 of the top Canadian stocks, including recognizable names such as Loblaw Companies, Fortis, and Hydro One. They may not be top growth stocks by any stretch, but they can make for solid and dependable investments to hang on to for the long term, regardless of what happens with the stock market.
The fund also offers a decent yield of 1.9%, which is better than the S&P 500 average of 1.1%. And its management expense ratio of 0.39% isn't too high. This year, the ETF has steadily generated returns of just over 1%, without factoring in its payout. And over the past five years, it is up by nearly 50%.
It's not the flashiest option out there, but if your priority is safety, preserving your capital, while collecting a great dividend, then it can be an excellent ETF to consider for your portfolio right now.
