Q: BMO is now introducing Spyder ETFs for each major US market sector. They have the unhedged and hedged. Which of these sector ETFS do you like and would you do unhedged or hedged? I know there is ZQN and ZQQ which you have recommended, so I'm wondering what the difference would be in those versus ZXLK. Thank you!
5i Research Answer:
Generally speaking, we prefer unhedged products viewing currency as an additional form of diversification. ZXLK, focusing on large cap tech, is very similar to ZQQ. ZQN is not a symbol. The funds are new and small, and we would prefer to wait a bit, but they are of course essentially a call on specific sectors. From a market positioning point of view, our preferences would be tech (ZXLK), industrials (ZXLI) and materials (ZXLB). This is on the assumptions that markets remain 'normal' and interest rates move lower. For investors positioning for a different market scenario or a recession, we would be more focused on utilities and staples. (ZXLU and ZXLP)