A Magnificent ETF I’d Buy for Relative Safety

It feels like there are new Canadian ETF launches every month or so. While the selection on the TSX Index certainly isn’t as extensive as in the U.S. markets, there are more than enough ETFs to give your average Canadian a bit of decision fatigue. Undoubtedly, there are a lot of overlapping TSX ETF products, especially if we’re talking about the Canadian equity index ETFs.

And while most new ETF releases aren’t all too remarkable (perhaps a few lower the bar on management expense (MER) ratios by a few basis points), I do think that there are a growing number of intriguing, unique products that might be worth a closer look. Of course, index investing is the way to go if you’re all about minimizing your costs. That said, perhaps it makes a bit of sense to pay up for something that your portfolio (say, your TFSA or RRSP) might be lacking.

If you’re all-in on an ETF that mirrors the TSX Index or something similar, you might be lacking sector exposure beyond financials, energy, and materials. As it turned out, being heavier in these sectors was actually a source of outperformance, at least in the past year or so. That said, broader sector diversification is a must for investors seeking to increase the “safety” factor, so to speak.

While it can be as easy as buying a low-cost ETF that mirrors the S&P 500, Nasdaq 100, or even the Dow Jones Industrial Average – or exchanging your loonies for greenbacks to buy the NYSEARCA-listed ETFs that follow a specific country – I think there are certain investor tastes that might find something more compelling in the TSX-traded ETFs, even if the MER skews on the higher end.

Low-volatility ETFs could be worth buying

Personally, I think the Vanguard Global Minimum Volatility ETF (TSX:VVO) brings a lot to the table, and while the MER is a tad higher (at 0.39%), the slightly heftier price of admission is more than worth paying, especially since it really doesn’t get considerably cheaper than Vanguard ETFs, at least on the Canadian market. While the VVO isn’t exactly a newly-launched ETF, given its 10-year anniversary is up ahead, I still think it does the low-volatility strategy better than most of its newer rivals.

Of course, you’ll pay close to four times more in MER compared to a vanilla TSX Index ETF, but when it comes to truly global ETFs, you can expect to pay more. Add the low-volatility factor on top, and I’d argue that Vanguard could have charged a bit more for the unique mix of exposure, which just so happens to be gaining traction in the early part of 2026.

With a 0.47 beta and a more generous 2.1% dividend yield, the VVO may very well be the perfect basket of stocks to pick up, especially after the magnificent year-to-date melt-up of nearly 8%. The year is young, but the VVO looks poised for more TSX-beating performance. While I’m no fan of chasing momentum, I find it hard not to pound the table on the ETF for those seeking a smoother ride higher.

Finally, just because the ETF is low in volatility doesn’t mean it lacks growth. You’d be quite surprised to see the kind of innovative growth stocks (yes, some of them are plays on the AI trade) in the top-10 holdings list.

How about a Canadian version?

For investors seeking a domestic low-volatility ETF with lower valuations, the BMO Low Volatility Canadian Equity ETF (TSX:ZLB) is a standout pick. The 2% yield, 0.58 beta, and 4.6% year-to-date return might make the ZLB a hair less impressive than the VVO, but you’re getting a price-to-earnings (P/E) multiple that’s lower (currently hovering between 17–18). If you want low volatility, value, and yield, perhaps the ZLB is an option to consider as well.

The post A Magnificent ETF I’d Buy for Relative Safety appeared first on The Motley Fool Canada.

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Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.