BMO’s Top 6 low correlation ETFs
The benefit of adding lower correlation investments to your portfolio is a reduction in the volatility of the overall portfolio returns. A portfolio with lower variability of returns also tends to help you stay invested over the long run in different market environments.Jul. 30, 2022
- 38% correlation to Canadian markets (ZCN), 11% correlation to US markets (ZSP)
- Equal weight basket of global gold mining companies
- Gold is potentially a safe haven from market risk and an inflation hedge
- 39% correlation to Canadian markets (ZCN), 80% Correlation to US markets (ZSP)
- Alternative yield strategy with downside protection and ability to participate in some equity market growth
- Dynamically shifts equity allocation to react to market movements while writing put and call options on high quality US equities
- 42% correlation to Canadian markets (ZCN), 30% correlation to US markets (ZSP)
- Diversified portfolio of laddered Canadian rate reset preferred shares
- Sharing some qualities with both equities and fixed income, preferred shares provide investors a differentiated source of return and a steady stream of income.
- 51% correlation to Canadian markets (ZCN), 53% correlation to US markets (ZSP)
- North American listed global infrastructure companies
- Infrastructure is generally non-cyclical, providing stable and predictable free cash flow
- 58% correlation to Canadian markets (ZCN), 49% correlation to US markets (ZSP)
- Equal weight basket of Canadian REITs
- REITs offer differentiated revenue sources compared markets dominated by tech and new economy companies
- 61% correlation to Canadian markets (ZCN), 76% correlation to US markets (ZSP)
- Captures growth from global themes investing in companies with exposure to autonomous technology & industrial, genomics, fin tech, and next generation internet
- Selects companies and adjusts weights based on innovation themes, ZINN is benchmark agnostic
Source: Bloomberg, July 30 2022, Correlation over the two year period between July 2020 and July 2022 (ZINN correlation is since inception: Jan 20 2021). Correlation calculated in relation to US markets (ZSP – BMO S&P 500 Index ETF ) and Canadian markets (ZCN – BMO S&P/TSX Capped Composite Index ETF).
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