Description

The fund offers a minimum-volatility portfolio of US stocks. The fund's index uses an optimization algorithm to build a minimum variance portfolio, one that considers correlation between stocks rather than simply holding a basket of low-vol stocks. While XMS applies sector constraints in its optimizer, sector bets can be substantial, if unsurprising. The fund typically overweights defensive, dividend-paying sectors. XMS’ optimizer also aims to keep other risk factors marketlike as it dials back on volatility. The fund takes substantially less risk than the market portfolio as shown by low beta. Sibling fund XMU, offers the same exposure but does not hedge back to CAD.