How I’d Invest $50,000 of TFSA Cash as Canada-US Trade Uncertainty Grows

If you’re looking to avoid volatility and still make gains in your TFSA, here’s a low-volatility way to do it.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published April 17, 2025 8:45 pm EDT

Looking to invest a large sum like $50,000 within the protective shelter of your Tax-Free Savings Account (TFSA)? This would take a very thoughtful approach during unpredictable Canada-U.S. trade relations. The current economic climate is characterized by fluctuating trade policies, potential tariffs, and the resulting market volatility. This calls for investment choices offering a blend of stability to weather potential storms and inherent potential for long-term growth. This will help your capital appreciate over time. So let’s look at a stable option.

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills. — Source: Getty Images

HVOI

One such investment that warrants serious consideration in this context is the Harvest Low Volatility Canadian Equity Income ETF (TSX: HVOI). This exchange-traded fund (ETF) launched this month aims at providing investors with a smoother and less turbulent investment experience. That’s by focusing its holdings on Canadian equity securities showing historically lower levels of volatility compared to the broader market.

Furthermore, HVOI employs an active management style. This means that a team of investment professionals continuously makes decisions about the fund’s holdings. That’s instead of tracking a passive index. To enhance the monthly cash distributions that investors receive, the ETF also utilizes a covered call strategy.

The underlying portfolio of HVOI is comprised of a carefully selected basket of 40 equity securities. These are all prominent and well-established Canadian companies. The diversified exposure across various sectors of the Canadian economy helps to mitigate the risks associated with concentrating investments in a single industry or a small number of companies. This is particularly beneficial during periods of market uncertainty. By holding a diversified mix of these kinds of stable and established companies, HVOI provides a degree of resilience against market-wide fluctuations.

Works long term

A key component of HVOI’s strategy for generating income is its use of a covered call strategy. This involves the fund owning shares of its portfolio companies and then selling call options on those holdings. A call option gives the buyer the right, but not the obligation, to purchase the shares at a specific price on or before a certain date.

When HVOI sells these call options, it receives a premium, which generates additional income for the fund. This income is then passed on to investors in the form of attractive monthly cash distributions. The covered call strategy can be particularly beneficial during periods of market uncertainty, or when the prices of the underlying stocks are not expected to rise significantly in the near term. It allows the fund to generate income even in a relatively flat market, while still maintaining exposure to potential capital appreciation if the stock prices do rise, albeit with some potential limitations due to the call options.

For Canadian investors looking to strategically allocate a significant portion of their TFSA funds during the Canada-U.S. trade relations uncertainty, HVOI offers a strong solution. Its core emphasis on investing in low-volatility Canadian equities provides a degree of stability that can weather market turbulence. This focus, combined with an active management approach and an income-generating covered call strategy, aims to deliver attractive monthly cash flows while also prioritizing the preservation of capital. This combination can be particularly well-suited to the goals of TFSA investors who are seeking to grow their savings in a tax-efficient manner while also mitigating downside risk during uncertain economic times.

Bottom line

As with any investment decision, it remains essential for individual investors to conduct their own thorough research and carefully consider their own unique financial goals, time horizon, and tolerance for risk before making any investment commitments. Consulting with a qualified financial advisor can also provide personalized guidance. This would be specifically tailored to your individual investment objectives and circumstances. A financial advisor can help you assess whether an ETF like HVOI aligns with your overall investment strategy and risk profile. Furthermore, they can provide valuable insights to help you make informed decisions about how to best allocate your TFSA funds during periods of economic and trade uncertainty.