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BMO Low Volatility Canadian Equity ETF (ZLB)
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iShares Core MSCI Canadian Quality Dividend Index ETF (XDIV)
Q: Good evening 5i,
I have held ZLB for some time and while happy with the holding as part of my portfolio, I am considering a switch to HDIV. It would continue to be a long term hold.
Based on past perfromance, I don't see that the ZLB provides that much less volatility protection over HDIV to justify the higher fees and lower yield.
I would certainly appreicate your thoughts.
Thanks
I have held ZLB for some time and while happy with the holding as part of my portfolio, I am considering a switch to HDIV. It would continue to be a long term hold.
Based on past perfromance, I don't see that the ZLB provides that much less volatility protection over HDIV to justify the higher fees and lower yield.
I would certainly appreicate your thoughts.
Thanks
5i Research Answer:
Beta, the measure of volatility, is 0.541 for ZLB (Bloomberg data) vs 0.816 for HDIV. So, mathematically at least, it is less volatile. But this is an apples/orange comparison. ZLB is a low vol equity fund. HDIV is a covered call fund. HDIV also uses 25% leverage so returns will likely be much better when markets are rising, with the opposite true in a decline. We are comfortable with either, but we would not consider them comparable in the true sense. Over three years HDIV is annualized 12.11% and ZLB 10.15%.