I don’t believe in timing the market, but moments like these should make every investor reassess their risk tolerance. That doesn’t mean selling everything and hiding in cash.
A better solution is to take a more thoughtful approach to your equity exposure through a fund built for stability—like BMO Low Volatility Canadian Equity ETF (TSX:ZLB).
Here are three reasons I think this defensive-minded exchange-traded fund (ETF) deserves a spot in the portfolios of lower-risk or older investors.
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Swings less than the market
ZLB is designed to move less than the overall market. It’s built using a rules-based methodology that selects Canadian large-cap stocks with lower beta—a measure of how sensitive a stock is to market movements. The S&P/TSX 60 Index has a beta of one, meaning it moves in line with the market. Stocks with a beta below one tend to fluctuate less, providing smoother performance through market ups and downs.
The ETF’s underlying portfolio is rebalanced every May and reconstituted each November, ensuring it continues to hold lower-volatility names as market conditions evolve. Over time, this process has helped ZLB achieve smaller drawdowns during market corrections while still capturing much of the upside during recoveries.
More defensive sectors
Unlike the broader S&P/TSX Composite Index, which leans heavily toward financials and energy, ZLB allocates more to consumer staples and utilities. These are known as defensive sectors because demand for their products and services doesn’t fluctuate much with the economy, unlike technology or consumer discretionary.
Consumers continue to buy household goods, groceries, and pay electricity bills whether markets are booming or shrinking. That inelastic demand helps support earnings and dividends even when cyclical sectors—like energy or materials—struggle. As a result, ZLB’s sector mix naturally dampens volatility.
Automated management
You don’t need to research low-beta stocks or handpick defensive sectors—ZLB automates all of that for you. The ETF’s methodology does the screening, weighting, and rebalancing automatically, offering a ready-made low-risk portfolio in a single holding.
It’s also reasonably priced, with a management expense ratio (MER) of 0.39%, or $39 per $10,000 invested annually. That cost covers a fully managed strategy with proven results.
With $5.3 billion in assets and a 2% yield, ZLB remains one of Canada’s most popular ETFs for investors seeking stability and income without sacrificing long-term growth potential.
