Q: According to my TD research, on a 1, 3, and 5 year basis, ZLB has outperformed ZCN despite ZLB's higher MER and lower dividend. Is that a reasonable apples to apples comparison? I'm wondering if it's worth it to sell my ZLB and buy ZCN or does it all work out to about the same? Thanks. And belated Happy Thanksgiving
5i Research Answer:
We see that ZCN has outperformed on a 5-year and 1-year basis while ZLB has outperformed on a 3-year basis. The two ETFs have differing strategies but there will be some overlap due to the nature of the Canadian market. ZCN is capped broad market TSX exposure whereas ZLB is low volatility (higher beta) Canadian equity exposure so the two are now a direct comparison. Unless one is seeking a lower risk option, we would lean ZCN due to the lower fee and higher growth potential. We think a switch from ZLB to ZCN makes sense.