Q: Hi Peter, Ryan, and Team.
Would you endorse a switch from ZLU to VFV? When I look at the sector breakdown of ZLU, I notice that ZLU is heavy in sectors that probably should currently be under-represented, and very light in sectors that should have higher concentration. And of course, the MER of 0.08% for VFV is better than ZLUs of 0.30%.
ZLU is held in our Margin account, and VFV is already held in our RRIFs.
Thanks as always for the timely advice.
Would you endorse a switch from ZLU to VFV? When I look at the sector breakdown of ZLU, I notice that ZLU is heavy in sectors that probably should currently be under-represented, and very light in sectors that should have higher concentration. And of course, the MER of 0.08% for VFV is better than ZLUs of 0.30%.
ZLU is held in our Margin account, and VFV is already held in our RRIFs.
Thanks as always for the timely advice.
5i Research Answer:
We don't think it is a fair comparison given that ZLU focuses on low-volatility stocks and VFV follows the S&P500, the top five of which have exhibited significant volatility over the past six months. The sectors represented by ZLU correspond to the shift in market sentiment towards high-volatility sectors such as tech, discretionary, and communications. If the intend is to switch from one to the other, we think it makes sense. We also think that it is not required to be a 1 to 1 replacement and that both can coexist in a portfolio.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in VFV.