All posts by Financial Independence Hub

BMO’s Low Volatility ETFs are built differently — Why that’s a Win for your Portfolio

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Image courtesy BMO/Getty Images

By Zayla Saunders, BMO ETFs

(Sponsor Blog)

Markets are noisy right now. Between trade talks, shifting rate expectations and recession whispers, there’s no shortage of turbulence. That’s why low-volatility strategies are back in focus: and BMO’s lineup is standing out.

Not all low-vol ETFs are created equal. In fact, BMO’s low-volatility ETFs have been quietly dominating their corner of the market. Here’s what’s working with the approach and the key differentiators of the methodology.

Source: Morningstar as of March 31, 2024 2

Smart, Targeted Methodology

BMO doesn’t just take the market and strip out the riskiest names. Its methodology is precise, practical, and time tested

Step 1: The Starting Point

BMO begins with a broad universe of stocks that are the largest and most liquid from a particular region — say, Canada or the U.S. — and then ranks them based on historical return volatility (also known as beta). Lower is better here.

Step 2: Ranking

Next, the securities are ranked and selected based on their beta, with lowest betas carrying the highest weight in the portfolio. Beta is calculated using 5-year window, with more weight on recent data. Then the team engages in a fundamental review of securities held.

Step 3: Sector Constraints

Unlike some low-vol strategies that end up extremely overweight in defensive sectors (hello, utilities and consumer staples), BMO imposes sector caps. Why? To ensure diversification and avoid concentration risk. That means that while there will be a tilt towards defensive sectors, you’re building a balanced, resilient portfolio.

The Burning Question: Why ‘Beta’?

Beta and Standard deviation are two of the most common ways to measure a fund’s volatility. The key difference is that beta measures a stock’s volatility relative to the market as a whole, while standard deviation measures the risk of individual stocks.

This is where BMO ETFs stands apart in their strategy: The BMO ETF Low Volatility Strategy uses beta as the primary investment selection and weighting criteria. By constructing ETFs with lower beta securities, the BMO ETF Low Volatility Strategy gives investors access to portfolios that are designed to provide growth while reducing exposure to market risk. Over the long term, low beta stocks may benefit from smaller declines during market corrections and still increase during advancing markets. Additionally, they tend to be more mature and provide higher dividend yield than the broad market.

Beta is a risk metric that measures an investment’s sensitivity to fluctuations in the broad market (market sensitivity). The broad market is assigned a beta value of 1.00, an investment with a beta less than 1.00 indicates the investment is less risky relative to the broad market.

So why now?

Low volatility has always had its place: particularly for long-term investors looking to stay invested through all market cycles, or those who tend to be more emotional around volatility in their portfolio. But right now, the case is even stronger: Continue Reading…

Buying an Annuity versus Equities

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Billy Kaderli, RetireEarlyLifestyle.com

By Billy and Akaisha Kaderli

RetireEarlyLifestyle.com

Special to Financial Independence Hub

I read an article by Mark Hulbert titled Why retirees are better off safe than sorry.

This article was about retirement satisfaction and asked if having little money, a reasonable amount of money or lots of money made a difference.

I have followed Mark’s writings for years and was surprised that Mark, to make his point, was hawking annuities.

Mark explains that you could put $100,000 into an annuity and receive $501 per month guaranteed for your lifetime. This equates to $6,012 per year or a 6% return.

My perspective and why

Here’s the problem that I have with this.

Inflation. As inflation has heated up after years being quiet, your $501 monthly check is going to buy you less and less over time. The erosion of buying power will not be noticed at first but over the years it certainly will. This is a huge negative for me.

Once you turn your money over to the annuity company, you no longer have control of it and possibly it is no longer part of your estate. This means you cannot leave it to your spouse, a child, grandchild or your favorite cause. And remember, your annuity is only as good as the company that backs it. If they have dereliction in management or other calamities you could be getting back pennies on the dollar. It happens.

In the example with this annuity It will take you about 16.5 years to break even with your investment.

What if you die before that?

My suggestion

There are other options if you have $100K and want a 6% yield for income and still keep control of the asset.

For instance, you could purchase any or all of these high yielding dividend-paying stocks.

AT&T (T) yield 4.04%

Plains All American Pipeline (PAA) yield 9.10%%

Energy Transfer (ET), yield 7.32%

Exxon Mobil (XOM), yield 3.84%

Main Street Capital (MAIN) yield 5.51%

In this example, you could put $20,000 into each of the above for a 5.96% average yield or $5,962 per year income. Also, there is potential for these equities to increase in value as well as raise their dividends. So, in this case, you have the possibility of being able to reinvest any amount over the 6% giving you the opportunity to increase your holdings while still covering the $6,000 annual income.

Other options

However, if you are not comfortable owning three out of the five stocks in the energy field, for more diversification, you could purchase DVY, IShares Select Dividend ETF with a portfolio of 100 different companies and with a 3.72% yield.

The idea here is to receive the 3.72% dividend distributions and sell off $2,280 worth of shares annually to make the 6% yield.

How is that done? You invest 100K into DVY taking the quarterly dividends which amount to a 3.72% yield. After one year-and-a-day (so that you meet the long-term capital gains requirement), you sell off $2,280 worth of shares.

DVY 10 Year Total Return = +9.40%

In this example based on the past 10-year performance of DVY, your principal would have grown to approximately $109,400, year one, which is a 9.4% annual total return. You receive $3720.00 in dividend income and $2280.00 in capital gains = $6000.00, leaving approximately $103,400 invested.

We all know that past performance is no indication of future results, but there are no guarantees in retirement, investments, nor annuities.

See the performance chart below. Continue Reading…

Unlock Healthcare Value and Monthly Income | HHL & HHLE

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Image courtesy Harvest ETFs

By Ambrose O’Callaghan, Harvest ETFs

(Sponsor Blog)

The U.S. healthcare sector has faced unique challenges in late 2024 and the first half of 2025. Last year, we provided an in-depth look at global healthcare as a long-term opportunity and examined some of the catalysts and innovations that were impacting the sector. Today, the U.S. and global healthcare space continues to evolve while combatting headwinds in some key areas.

The state of U.S.  healthcare equities

Healthcare performed relatively well in the early part of 2025, despite broader trade uncertainty and macroeconomic headwinds. The medical technology and tools sub-sector experienced some short-term volatility that was driven by the uncertainty surrounding tariffs. That comes as little surprise, considering companies in the space reliance on oversees manufacturing and revenue generation.

Domestic names, like those in Managed care and select Biopharmaceuticals, remained relatively insulated during this period. This stemmed from an easing in the tariff narrative, which was triggered by a sharp drop in several macroeconomic indicators that included manufacturing activity and consumer confidence. As we progressed further into 2025, a cloud of uncertainty crept into healthcare. That contributed to some recent volatility across several sub-sectors. In this article, we have provided some recent catalysts to help investors make sense of the current situation in healthcare.

Drug pricing in 2025

On May 12, 2025, President Donald Trump signed an Executive Order (EO) titled “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients.” This EO proclaimed that the Trump administration “will take immediate steps to end global freeloading and, should drug manufacturers fail to offer American consumers, the most-favoured-nation lowest price, my Administration will take additional aggressive action.”

Ultimately, the aim is to align U.S. drug prices more closely with lower prices paid internationally. This EO echoes a summer 2020 Trump-era EO that was blocked in court and failed to be implemented. The current version faces similar hurdles. There is no bipartisan backing for the policy, the legality surrounding it is dubious, and there is opposition among both Democrat and Republican lawmakers.

All of these make the implementation of this EO unlikely. However, we could see pilot programs within the Department of Health and Humans Services (HHS), making attempts to fold the current EO’s proclamations into future IRA negotiations, or more comprehensive legislative proposals.

In addition, there are those who have predicted the policy could reduce the research and development (R&D) budgets further. That could potentially impact innovation and companies that have been propelled due to strong R&D spending. However, the risk may truly lie in the negative sentiment that continues to emerge in the news cycle.

Vaccine market uncertainty

The appointment of Robert F. Kennedy Jr. as the United States Secretary of Health has damaged sentiment for healthcare companies that manufacture vaccines. RFK Jr. is a vocal “vaccine sceptic.” Moreover, the Trump administration has pursued leadership changes at the Food and Drug Administration (FDA), which raises questions about stricter vaccine approval processes going forward.

Merck & Co, the U.S.–based pharmaceutical giant, with its vaccine-related businesses, has felt the pressure. In addition to the political uncertainty, a recent CMS technical document has added to the complexity in the vaccine arena. The report suggested that reformulated drugs may no longer be classified as “new” for Medicare negotiations. This development could impact companies with operations in the “combination therapy” space like Johnson & Johnson’s Darzalex Faspro, or Bristol Myers’ subcutaneous version of Opdivo. That could affect future patent projections as well. Continue Reading…

The stock market and politics: a Case Study in Applied EMH Testing

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Image courtesy Pixabay: Sergei Tokmakov

By John De Goey, CIM, CFP

Special to Financial Independence Hub

I have long been interested in the interplay between politics and the stock market. We had a fascinating real world case study that played out in real time last month.

Those who know me will likely know that I have long been a proponent of the Efficient Market Hypothesis, which was put forward by Nobel Laureate Eugene Fama as a means of explaining capital market behaviour. It comes in three forms: weak, semi-strong, and strong: each representing different levels of market efficiency.

The Weak form asserts that all past market prices and data are fully reflected in current stock prices. Therefore, technical analysis methods, which rely on historical data, are deemed useless as they cannot provide investors with a competitive edge. However, this form doesn’t deny the potential value of fundamental analysis.

The Semi-strong form extends beyond historical prices and suggests that all publicly available information is instantly priced into the market. This includes financial statements, news releases, economic indicators, and other public disclosures. Therefore, neither technical analysis nor fundamental analysis can yield superior returns consistently.

Finally, the Strong form asserts that all information, both public and private, is fully reflected in stock prices. Even insiders with privileged information cannot consistently achieve higher-than-average market returns. This form is criticized because it conflicts with securities regulations that prohibit insider trading.

Examples supporting EMH

While the EMH has faced criticisms and challenges, it remains a prominent theory in finance that has significant implications for investors and market participants. It has been both supported and challenged by various market phenomena. Here are some notable examples supporting EMH:

Random Walk Theory: Stock prices appear to follow a ‘random walk,’ meaning past prices do not predict future movements, something that is disclosed and disclaimed on every prospectus.

Index Fund Performance: Passive index funds often outperform actively managed funds, suggesting that markets efficiently price securities, especially once fees are taken into account.

Earnings Announcements: Stock prices quickly adjust to new earnings reports, reflecting the semi-strong form of EMH.

Examples challenging EMH

The obvious example that challenges EMH is the existence of stock market bubbles. Events like the Dot-Com Bubble and the 2007-2009 Global Financial Crisis show that prices can deviate significantly from intrinsic values and for prolonged periods of time. Such anomalies suggest that while markets are generally efficient, behavioral biases and structural factors can lead to inefficiencies, include macro-level mispricings. A well-known industry chestnut is that “markets can remain irrational longer than you can stay solvent.” Here’s where the story gets interesting …< Continue Reading…

Canadians keeping their Florida properties (Podcast transcript)

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Image via Pixels/Brendon Spring

Kevin Depocas Dumas says even with current U.S.-Canada tensions he’s not seeing a lot of Canadians who want to sell their Florida properties.

In the latest episode of Two Way Traffic, he and host Darren Coleman discussed issues affecting Canadians who own property in the state. About half a million Canadians are in that boat.

Dumas is Associate Vice President of Business Development of NatBank, a wholly owned subsidiary of the National Bank of Canada that’s operated in Florida for over 30 years.

Topics he and Coleman discussed include:

  • Difficulties Canadians in the U.S. have in getting a mortgage from an American bank and what to do about it.
  • Problems Canadians in the U.S. – even wealthy ones – have in obtaining credit or getting a loan.
  • Why it’s cheaper to deal with an American financial institution than a Canadian one when in the U.S., but there could be issues you may not anticipate.

Link to podcast …

https://twowaytraffic.transistor.fm/episodes/canadians-say-they-will-stay-in-fla

Darren Coleman

Today I’m joined by Kevin Dupocas Dumas, AVP of NAT Bank in Florida. So you guys have offices in Naples. Where else?

Kevin Depocas Dumas

We have three other branches on the east coast of Florida. One in Hollywood. One in Pompano Beach. And one in Boynton Beach.

Darren Coleman

This conversation is going to be helpful for Canadians who have or want to have property in Florida. So let’s guide people through this. Who is NAT Bank?

Kevin Depocas Dumas

Kevin Depocas Dumas

NAT Bank was created 30 years ago and we are a wholly owned subsidiary of National Bank of Canada. We’ve been operating here for 30 years offering financing solutions or banking solutions primarily for Canadians. A lot of Canadians may not have access to the financing market or the banking market here. We take care of those needs for them, especially for those who spend half their year in Florida.

Darren Coleman

You and I just happened to meet each other. I was in Naples and you guys were doing a presentation in your branch for your clients. You had a cross-border attorney doing the presentation and it just happened to be my friend Shlomi Levy who’s been on this podcast. I should give full disclosure since I was a vice president at National Bank Financial for five months after they acquired HSBC. So what are some of the challenges if Canadians have property or wish to buy property in the U.S.? How easy is it to go into a U.S. bank and say I’d like a mortgage on my condo? Or a mortgage on my property? How easy is it to get a U.S.-domiciled mortgage?

Kevin Depocas Dumas

This is actually the biggest problem for Canadians coming down here. They cannot use their Canadian credit history or their Canadian assets. They’re not going to be using any documents that come from Canada. So they don’t qualify for a loan, or if they do, they have to go to the private lenders: which usually won’t do a loan at more than 50% LTV. So Canadians are not only faced with the currency exchange, but where are they going to get funds from investments they’re holding and putting it into buying the property? This is the biggest thing they’ll face here. Continue Reading…