Market Got You Scared? Check Out These 4 Ultra-Safe ETFs

If you’re looking for a safe investment portfolio, consider iShares Core MSCi All-World ex-Canada ETF (TSX:XAW).

| More on:

The market is pretty volatile these days. Tech stocks have been selling off like they’re going out of business, taking the broader stock market down with them. For the year, the NASDAQ is down a full 15%, and futures are pointing to more selling on Monday. It’s a tough time, to be sure. But there’s a silver lining to all of this. Because the market volatility these days is so heavily concentrated in tech stocks, there are other sectors you can invest in that are much safer. In this article, I will explore four ultra-safe ETFs that can help you sleep well in this volatile market.

Canadian banks

BMO Equal-Weight TSX Banks ETF (TSX:ZEB) is a Canadian banking fund that holds Canada’s big bank stocks. The fund is equally weighted, which means that no one stock makes up too large a percentage of its holdings. Bank stocks are pretty well positioned in 2022. Interest rates are set to rise, and that sometimes improves bank profit margins. Additionally, banks are still cheap, even after handsomely outperforming the market in 2021. So, there is some reason to think they’ll continue outperforming in 2022. ZEB is one fund you can buy to get exposure to this sector.

TSX 60

iShares S&P/TSX 60 Index Fund (TSX:XIU) is Canada’s most popular index fund. It holds the 60 largest publicly traded Canadian companies. Canadian markets are heavily concentrated in banks, utilities and energy stocks — three sectors that are doing better than tech this year. Over the last 12 months, XIU has outperformed the S&P 500. It may continue to do so in the year ahead. While tech stocks are getting cheap enough now that the overperformance of value stocks could cool off, the macro environment still benefits value. So, some exposure to XIU in your portfolio is justifiable.

The S&P 500

Vanguard S&P 500 Index Fund (TSX:VFV)(NYSE:VOO) is one of the most popular index funds in the world. It holds a diversified portfolio of the 500 biggest publicly traded U.S. stocks. The U.S. has a lot more tech exposure than Canada does, which is why the S&P 500 is lagging the TSX this year. Nevertheless, the S&P 500 is one of the best-performing stock indexes in the world. The U.S. is the epicentre of many industries, and its stock market has outperformed global stocks for decades. So, the Vanguard S&P 500 index fund is very much worth buying. There’s even a Canadian-listed version of the fund you can buy (VFV), though it has a higher management expense ratio than the U.S. version.

Global stocks minus Canada

Last but not least, we have iShares Core MSCi All-World ex-Canada ETF (TSX:XAW). This is one of the most diversified ETFs you can find, holding most of the world’s major stocks. If you want to lower your risk in stocks, this fund is about as good as it gets. In academic finance theory, the more diversified the portfolio, the better. You can’t get much more diversified than holding all the stocks in the world. So, XAW is one fund you might want to consider if you’re looking to reduce your risk as much as is possible within the realm of equities.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button owns Vanguard S&P 500 ETF and iSHARES SP TSX 60 INDEX FUND. The Motley Fool has no position in any of the stocks mentioned.

More on Investing

Investing

Got $1,000? 3 Top Canadian Stocks to Buy Right Now

These three Canadian stocks are ideal additions to your portfolios.

Read more »

customer uses bank ATM
Dividend Stocks

Here’s the Average TFSA and RRSP at Age 65 for Canadians

The TFSA and RRSP together make an ideal pairing for retirees, but is the average even enough?

Read more »

nvidia headquarters with nvidia sign in front
Tech Stocks

Nvidia Just Delivered a Beat-and-Raise Quarter. There’s 1 Red Flag Investors Shouldn’t Ignore.

The chipmaker continued to benefit from robust demand for artificial intelligence (AI). But can it last?

Read more »

GettyImages-1473086836
Tech Stocks

Why Super Micro Computer Stock Is Soaring Today

The volatile stock is getting a boost from Nvidia.

Read more »

Snowflake logo in snowflake office on wall_snowflake-1
Tech Stocks

Here’s Why Snowflake Stock Skyrocketed Today

Shares of the data company are up 32% for the day.

Read more »

man touching magnifying glass button on floating search bar internet google search engine
Tech Stocks

Why Alphabet Stock Was Sliding Today

The parent company of Google is facing heat from U.S. regulators.

Read more »

chart reflected in eyeglass lenses
Tech Stocks

Top Canadian AI Stocks to Watch in 2025

Celestica (TSX:CLS) stock and another Canadian AI stock are worth watching closely this holiday season.

Read more »

woman looks out at horizon
Investing

Is Sun Life Financial Stock a Buy for its 4% Dividend Yield?

Let's dive into whether Sun Life Financial (TSX:SLF) stock is a buy for its dividend yield alone, or if this…

Read more »