Global asset manager and exchange traded fund provider BMO Asset Management has added to its smart beta range with the launch of two new currency-hedged low volatility funds. The ETFs are listed on the Toronto Stock Exchange and provide a solution to investors looking to navigate choppy markets and work by applying higher weights to constituents with lower historical betas (a measure of the firm’s sensitivity to broad market returns).
BMO Asset Management have launched two new ETFs offering currency hedged exposure to US-listed or international equities while tilting towards stocks with low volatility.
“These new listings build on our successful suite of low volatility ETFs and are structured to help manage the highs and lows of the markets,” said Kevin Gopaul, Chief Investment Officer and Senior Vice President, BMO Asset Management. “Our unique methodology seeks to provide investors with lower risk than the broad market while still offering growth opportunities.”
The BMO Low Volatility International Equity Hedged to CAD ETF (TSE: ZLD) utilizes a rules-based methodology to build a portfolio of less market sensitive stocks from a universe of international large-cap stocks. The foreign currency exposure is hedged back to the Canadian dollar. The underlying portfolio is rebalanced in June and reconstituted in December.
As of 10 February 2016, the fund has 100 holdings with large exposures to utilities (18.6%), consumer staples (17.4%), financials (15.4%), health care (11.6%) and industrials (11.5%). The largest country exposures are Japan (21.4%), France (17.3%), Hong Kong (10.3%), the UK (8.3%) and Germany (8.0%). It has maximum annual management expense of 0.45%.
The BMO Low Volatility US Equity Hedged to CAD ETF (TSE: ZLH) employs the same systematic processes to build a portfolio with lower beta than the market from a universe of US large-cap stocks. The foreign currency exposure is hedged back to the Canadian dollar and the underlying portfolio is rebalanced in June and reconstituted in December.
As of 10 February 2016, the fund consists of 100 securities and is invested primarily in the utilities (27.5%), consumer staples (24.9%), health care (16.0%) and consumer discretionary (10.1%). A total expense ratio of 0.34% applies.