For this week’s content analysis we used StockPointer to build an ETF, in order to be in a better position to assess the quality of its constituents. The ETF in question, BMO’s Low Volatility Canada Equity (ZLB), has experienced rather good performance since its creation in October 2011, similar to our own StockPointer Canadian model portfolio. You can access further details on this specific ETF at the following web address: http://www.etfs.bmo.com/bmo-etfs/performance?fundId=86812. You can also open the ZLB’s SPScore table attached. Download
Thanks to the PFScan tool, we can quickly determine where each company in the ETF is positioned with respect to its rate of value creation (EPI) and to its future growth value premium or discount level (FGV).
The results are clear: of the 38 companies held in the ETF, only six would be “to avoid” in our model (FNV, ENB, ALA, REF.UN, TA, and HR.UN). From an EVA perspective, ZLB is a high-quality exchange-traded fund. Download
Of note is that this ETF’s performance would have been even better over the past year if the six companies listed above had been omitted (wealth-destroyers, trading at a premium), as of those six, only ENB outperformed the ETF itself.
In conclusion, don’t forget that StockPointer can help you quickly assess the quality of an ETF (or any other portfolio!) for a client who wishes to own any.