Mike Philbrick’s Top Picks for April 11, 2025

Mike Philbrick, CEO, ReSolve Asset Management

FOCUS: exchange-traded funds

Top picks: iShares MSCI Min Vol USA Index ETF, BMO Long-Term US Treasury Bond Index ETF, Vanguard FTSE Developed All Cap ex North Amer Idx ETF

MARKET OUTLOOK:

Markets have been on a rollercoaster. After a sharp correction of over 20 per cent driven by fears around newly announced U.S. tariffs, the S&P 500 Index staged a dramatic 10 per cent single day rebound on news that most tariffs would be paused for 90 days. Historically, such aggressive snapbacks have marked turning points—seen after COVID-19, during the GFC, and even post-1987’s Black Monday.

But this rally alone doesn’t resolve the core concern: are we simply postponing a recession, or is the path already set? If unemployment begins to rise—arguably the clearest signal of recession risk—history suggests further downside may be ahead. However, the bond market tells a more nuanced story. Typically, as a recession approaches, the yield curve steepens. Today, we’re seeing the opposite: re-inversion, a signal that may suggest the labor market remains intact and the economy isn’t heading into contraction—yet.

Adding to the mixed signals is the recent widening of high-yield credit spreads—a classic “risk-off” indicator that reflects rising concern about corporate credit risk. This suggests that despite the rebound in equities, caution is still embedded in broader market sentiment.

Bottom line: this doesn’t feel like a textbook recession setup. If tariff tensions ease and labor markets remain stable, we could be witnessing a classic growth scare—not a full-blown downturn. Still, caution is warranted. Now is the time to ensure your portfolio risk aligns with your long-term tolerance, that you have sufficient liquidity to weather continued volatility, and that you’re harnessing truly diversifying asset classes and strategies to help smooth the ride. Lastly, stay engaged and disciplined volatility often creates opportunity for those prepared to act.

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TOP PICKS:

iShares MSCI Min Vol USA Index ETF (XMU TSX)

XMU provides Canadian investors with exposure to U.S. equities using a minimum volatility strategy, designed to reduce portfolio drawdowns and smooth returns over time. The ETF tracks the MSCI USA Minimum Volatility Index and is not currency-hedged, meaning returns will reflect both U.S. equity performance and Canada-U.S. dollar exchange rate movements and is available in U.S. dollars and U.S. dollar currency hedged options.

The index uses an optimization process to select and weight stocks with lower historical volatility and low correlation to each other. The result is a U.S. equity portfolio that has historically offered better downside protection than broad market indexes. While minimum volatility strategies can lag in fast-rising markets, they tend to shine when markets get choppy. For example, year-to-date (as of April 10, 2025), the S&P 500 has experienced a drawdown of around 10 per cent, while XMU’s drawdown was closer to two per cent, highlighting its more defensive profile. XMU is a solid choice for long-term investors seeking U.S. equity exposure with a smoother ride and some built-in risk controls.

BMO Long-Term US Treasury Bond Index ETF (ZTL TSX)

ZTL provides exposure to long-duration U.S. Treasury bonds, making it a powerful tool for investors seeking to manage risk and diversify equity-heavy portfolios. The ETF tracks the performance of U.S. Treasury bonds with maturities of 10 years or more—assets that have historically acted as a haven during periods of economic stress, growth shocks or equity market drawdowns. As interest rates stabilize or begin to fall in response to slowing growth or recessionary pressures, long-term bonds tend to outperform, benefiting from price appreciation. This makes ZTL particularly compelling in late-cycle or recessionary environments, where both equity risk and short-term interest rates may decline. The ETF is also available in a currency-hedged version (ZTL.F), allowing Canadian investors to manage their exposure to U.S. dollar fluctuations. Given its sensitivity to interest rate changes and low correlation to equities, ZTL can serve as an effective portfolio ballast—enhancing diversification, mitigating drawdowns, and positioning for potential capital gains if a rate-cutting cycle unfolds.

Vanguard FTSE Developed All Cap ex North Amer Idx ETF (VIU TSX)

VIU offers Canadian investors diversified exposure to developed markets outside of North America, including Europe, Japan, and the Asia-Pacific region. The ETF holds a broad mix of large, mid, and small-cap companies and tracks the FTSE Developed All Cap ex North America Index, making it a comprehensive international equity holding. Unlike many international ETFs, VIU is unhedged, meaning performance reflects both the underlying equity markets and currency movements relative to the Canadian dollar. It serves as a strong diversifier to U.S. and Canadian equities, helping reduce geographic concentration in North American markets. From a portfolio construction perspective, VIU plays a valuable role by spreading risk across countries with different economic cycles and sector compositions. While global markets have lagged U.S. mega-cap growth stocks in recent years, this can also present valuation opportunities for long-term investors. So far in 2025 (as of April 10 2025), the S&P 500 experienced a drawdown of over 12 per cent in Canadian dollar terms, while VIU’s drawdown has been closer to one per cent in Canadian dollar terms, reflecting its more diversified country exposure and lower correlation to U.S. tech-heavy indices. VIU is a solid core holding for investors seeking long-term global diversification outside North America, with broad sector and market-cap coverage and modest volatility.

PAST PICKS: April 26, 2024

BMO Equal Weight Oil & Gas Index ETF (ZEO TSX)

• Then: $72.68
• Now: $64.57
• Return: -11%
• Total Return: -7%

iShares Silver Trust (SLV NYSEARCA)

• Then: US$24.89
• Now: US$28.78
• Return: 16%
• Total Return: 16%

Sprott Physical Uranium Trust (U.U TSX)

• Then: $28.95
• Now: $19.05
• Return: -34%
• Total Return: -34%

Total Return Average: -8%