Richard Orrell’s Top Picks for Aug. 14, 2026

Richard Orrell, Portfolio Manager, RN Croft Financial Group

Focus: ETFs

Top Picks: Vanguard Global Momentum Factor ETF, BMO US High Dividend Covered Call Hedged to CAD ETF, Global X U.S. Infrastructure Development Index ETF

MARKET OUTLOOK:

After three months of range-bound consolidation, U.S. equities broke out to the upside, catalyzed by a sharp rebound in mega cap tech (Alphabet, Microsoft, Amazon, Meta, Nvidia) following a drawdown in July.

Defensive and cyclical sectors, namely energy, health care, and financials provided crucial market breadth during the tech pullback, which was triggered by growing market skepticism around the near-term return on investment on capex for artificial intelligence following second quarter (Q2) earnings.

Taking a weight-of-the-evidence approach, multiple structural drivers suggest the secular bull market remains intact:

• Earnings growth and multiple contraction: S&P 500 earnings revisions continue to tilt positive. Double-digit earnings per share (EPS) growth is facilitating fundamental multiple compression, allowing equities to de-risk valuation metrics without compromising price levels.
• Credit market confirmation: High-yield credit spreads remain tight, signaling minimal distress in corporate credit and confirming equity market stability.
• Macro cushion: While sticky core inflation driven by geopolitical headwinds may prompt marginal rate adjustments, terminal rates leave central banks with ample dry powder to deliver accommodative cuts if macro shocks materialize.
• Volatility: As measured by the CBOE Volatility Index (VIX), is touching a 15 handle. The old saying goes, never short a dull market!

Toronto Stock Exchange (TSX) performance remains robust, anchored by core sector weightings in financials, energy, and materials. Canadian dollars (CAD) and U.S. dollars (USD) spot rates have stabilized near the middle of the one year range: strengthening crude fundamentals offer CAD support, while the USD is supported by yield differentials and elevated real U.S. rates.

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TOP PICKS:

Vanguard Global Momentum Factor ETF (VMO TSX)

The Vanguard Global Moment Factor ETF is actively managed based on momentum, so it’s not tied to value or growth.

By quantitatively selecting stocks with strong short (six months) and intermediate (12 months) terms relative performance, it aims to capture excess capital appreciation over broad market indices.

I like two characteristics with this ETF. First, since it’s inception (10 years ago), the highest weight of any single security has been 1.6 per cent so the return isn’t being driven by a single security or the heaviest weights. Second, it’s a global approach with about 70% U.S. and provides exposure to mid and small caps which are often underweight in current portfolios.

I’m considering a substitution in the equity sleeve of client portfolios. The management expense ratio (MER) is 0.38 per cent.

BMO US High Dividend Covered Call Hedged to CAD ETF (ZWS TSX)

The BMO US High Dividend Covered Call Hedged to CAD ETF is a strong addition for income-focused Canadian investors seeking reliable cash flow with downside buffer.

By holding high-dividend U.S. equities and overlaying an active covered call strategy, the fund generates a high annualized distribution yield (6.50 per cent) while dampening portfolio volatility. Its built-in CAD hedging eliminates currency risk, isolating U.S. equity exposure from exchange-rate fluctuations.

Holding ZWS provides broad sector diversification, heavy exposure to top dividend-paying U.S. companies, and steady monthly income. This ETF is a good satellite position to boost overall yield without taking on direct currency exposure. We’ve been adding to client portfolios. The MER is 0.71 per cent.

Global X U.S. Infrastructure Development Index ETF (PAVE TSX)

The Global X U.S. Infrastructure Development Index ETF offers targeted exposure to the multi-year infrastructure buildout across the United States.

Rather than focusing solely on traditional construction, PAVE captures the full ecosystem including industrial equipment, raw materials, engineering, and logistics.

Supported by long-term government funding initiatives (such as the Infrastructure Investment and Jobs Act) and aging domestic assets, it benefits from strong structural tailwinds.

For portfolio construction, PAVE provides a growth-oriented, real-asset tilt that adds cyclical diversity outside standard mega-cap tech, giving investors a practical vehicle to capitalize on sustained capital expenditure cycles. While this ETF is relatively new, the underlying benchmark index has been around for 15 years. The MER is 0.49 per cent.

PAST PICKS: JAN. 29, 2026

BMO MSCI USA High-Quality Index ETF (ZUQ TSX)

Then: $98.36

Now: $112.80

Return: 15%

Total Return: 15%

Franklin International Low Volatility High Dividend Index ETF (FLVI CBOE)

Then: $28.36

Now: $30.11

Return: 6%

Total Return: 8%

Global X S&P/TSX 60 Covered Call ETF (CNCC TSX)

Then: $13.92

Now: $15,05

Return: 9%

Total Return: 12%

Total Return Average: 12%