David Cockfield, managing director and portfolio manager at Northland Wealth Management
Focus: Canadian equities and REITs

MARKET OUTLOOK

North American equity markets continue to be volatile and are churning at levels close to their recent highs. While the economic background remains positive, tariff wars, negative interest rates in much of the world, inversion of the yield curve and Brexit give investors lots to worry about. The environment they’re now facing is filled with elements never dealt with before. This variety of new market risks has resulted in forecasts by financial advisors ranging from “disaster and looming recession” to “we’re OK and equity markets are headed higher.” The truth is probably somewhere in between. In uncertain and volatile markets it’s appropriate to reduce risk. Diversification is important, which argues for ETFs that offer immediate diversification and are preferable to individual stocks until some of the risk currently in markets declines.

TOP PICKS

BMO LOW VOLATILITY CANADIAN EQUITIES ETF (ZLB:CT)
Last purchased in August at $33.91.

This ETF offers investors a high-quality diversified portfolio of low-beta Canadian and U.S. equities. A low-beta stock is less sensitive to day-to-day market movements. A low-beta portfolio tends to perform better in volatile markets. ZLB’s portfolio is rebalanced half yearly and reconstructed at year-end. The expense ratio is a low 0.33 per cent and it provides a yield of 2.4 per cent.

BMO COVERED CALL CANADIAN UTILITIES ETF (ZWU:CT)
Last purchased in August at $13.64.

This ETF gives investors exposure to a portfolio of Canadian and U.S. utility, telecom and pipeline stocks. Call options are written on securities in the portfolio to generate additional income.  Canadian stocks are 64.6 per cent of the portfolio; U.S. stocks, 31 per cent; international stocks, 3.9 per cent, with the remainder in cash. Utilities such as Emera make up 47 per cent of the portfolio; communication services such as Telus, 24 per cent of the portfolio; and energy mainly pipelines such as Pembina 26 per cent.  The portfolio is rebalanced in June and reconstructed in December. This ETF yields 6.5 per cent with an expense ratio of 0.7 per cent.

ISHARES CORE CANADIAN SHORT TERM CORPORATE + MAPLE BOND ETF (XSH:CT)
Last purchased in August at $19.36.

This ETF offers investors the opportunity to invest in a short-term diversified portfolio of fixed income securities, largely Canadian bank paper. This ETF is an alternative to non-paying cash balances and yields 2.7 per cent with full market liquidity. The management fee is a low 0.1 per ecnt and the ETF offers a safe alternative in volatile markets.

PAST PICKS: AUG. 10, 2018

ISHARES CORE MSCI ALL-COUNTRY WORLD EX-CANADA ETF (XAW:CT)

• Then: $26.13
• Now: $25.25
• Return: -3%
• Total return: -1%

ISHARES NORTH AMERICAN TECH ETF (IGM:UN)

• Then: $202.42
• Now: $211.22
• Return: 4%
• Total return: 5%

BMO LOW VOLATILITY CANADIAN EQUITIES ETF (ZLB:CT)

• Then: $30.58
• Now: $33.50
• Return: 10%
• Total return: 12%

Total return average: 5%

WEBSITE: www.northlandwealth.com