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Discussion Starter #1

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Thanks. The low vols are all really good. Cdn index is ~ 57% banks and energy so low vol is better for diversification. FQC CI First Asset Canadian Quality is also very good ( Quality factor) too.
 

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The low volatility ETF's are kind of interesting topic. It seems Yamada and Tretiakova are for them on the basis that the lower volatility creates less drag while the PWL guys are against them in part due to their higher MER's, higher turnover, and lower diversification. They all seem to agree that they have performed well though.
 

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No question they have performed well. My main concern is that they exclude certain sectors purely because they are volatile. What if those sectors come roaring back and lead the next bull market? ZLB would underperform.

We're even getting a little taste of that right now. Comparing ZLB and XIC,
Materials are 7% of ZLB, 15% of XIC
Tech is 3% of ZLB, 9% of XIC

These two sectors are on fire, and ZLB is missing out on the rallies. What if this theme continues for many years?

ZLB became very popular over the years mainly because it excluded energy, and therefore outperformed the main index. While I generally like ZLB's sector diversification, it basically has nil energy & tech and that could become a problem over the long term.

One could even argue that ZLB's outperformance is purely due to a kind of sector bet, where volatility happened to do the screening (a fluke) and they ended up excluding energy & commodities. In the last few years, this was a good sector bet. It might be bad going forward.
 

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No question they have performed well. My main concern is that they exclude certain sectors purely because they are volatile. What if those sectors come roaring back and lead the next bull market? ZLB would underperform.

We're even getting a little taste of that right now. Comparing ZLB and XIC,
Materials are 7% of ZLB, 15% of XIC
Tech is 3% of ZLB, 9% of XIC

These two sectors are on fire, and ZLB is missing out on the rallies. What if this theme continues for many years?

ZLB became very popular over the years mainly because it excluded energy, and therefore outperformed the main index. While I generally like ZLB's sector diversification, it basically has nil energy & tech and that could become a problem over the long term.

One could even argue that ZLB's outperformance is purely due to a kind of sector bet, where volatility happened to do the screening (a fluke) and they ended up excluding energy & commodities. In the last few years, this was a good sector bet. It might be bad going forward.
The low vols were getting overvalued I think. The P/Es were above the index and they have a good weighting of utilities that were way overvalued before teh crash. They are more reasonable now but can get overbought quickly again.

I started putting $ into FQC.
 

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Just found this BMO ETF. ZPAY.U. Mostly US t-bills. got thru the past 3 months reasonably well - high yield (+6%). What's the downside to this?
 

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Just found this BMO ETF. ZPAY.U. Mostly US t-bills. got thru the past 3 months reasonably well - high yield (+6%). What's the downside to this?
Larry Berman ( on BNN) likes this for income. It holds US stocks and options. The idea is to collect premiums on options for income. So you get more income and it acts like the stock market but w smaller moves both up and down. If the market rises you have a cap on the the upside and have to sell the stock so you get a premium + a little upside gain. ie if market is up 10% you may get 5%.

Similarly it also shorts stocks so if the stock goes down 10% (where your gain would be 10%) again you may only get 5%.

 
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