BMO's ZLI ETF: A Steady Anchor in Volatile Waters

In an era of market turbulence, income-seeking investors often face a dilemma: pursue growth in risky assets or settle for the meager returns of traditional fixed-income instruments. Enter the BMO Low Volatility International Equity ETF (ZLI:CA), which offers a middle ground. By focusing on low-volatility international equities, ZLI combines the potential for equity-like returns with a defensive posture, making it a compelling choice for those navigating uncertainty. Its recent dividend declaration underscores this strategy, positioning it as a reliable income generator in volatile times.

The Dividend Declaration: Consistency Amid Chaos

On June 20, 2025, BMO confirmed a CAD 0.16 per-share dividend, payable on July 3, 2025, to shareholders of record as of June 27, 2025. This marks the latest in a string of consistent quarterly payouts dating back to early 2023, with no reductions in the payout since then. A reveals a strategic shift: after a temporary dip to CAD 0.15 in 2020, the ETF restored its quarterly dividend to CAD 0.16 in 2021 and has maintained it ever since. This consistency is critical for income investors, as it avoids the abrupt cuts that plague many high-yield assets during downturns.

The 2.21% yield (as of June 20, 2025) further highlights ZLI's appeal. For context, this outperforms the average yield of global equity ETFs by roughly 0.5%, while its low-volatility mandate aims to shield investors from the sharp declines often seen in broader markets.

Low-Volatility Equity: A Defensive Shield

ZLI's strategy hinges on low-volatility international equities, a subset of stocks historically less prone to extreme price swings. These include established firms with stable earnings, dividends, and defensive sectors like healthcare or utilities. By overweighting such stocks, ZLI aims to reduce portfolio shocks while still benefiting from equity appreciation.

During volatile periods, this approach shines. Consider the first half of 2025: while global equities faced headwinds from geopolitical tensions and rising interest rates, ZLI's focus on steady performers likely minimized drawdowns. A would likely show ZLI outperforming or underperforming to a far lesser extent during declines, reinforcing its role as a portfolio stabilizer.

Timing is Everything: Capturing the Dividend

For income investors, the June 27 record date is a critical deadline. To qualify for the July 3 payout, shareholders must own the ETF by the close of trading on June 27. However, the ex-dividend date—also June 27—means purchases made after this date will exclude the upcoming dividend.

This timing emphasizes the need for proactive planning. Investors aiming to capture dividends should execute purchases well before the ex-date, as delays could result in missed payouts. For those holding ZLI long-term, the consistent quarterly schedule offers predictable income streams, a rare commodity in today's markets.

Balancing Risk and Return: Why ZLI Stands Out

ZLI's value lies in its ability to balance risk and return without sacrificing yield. Unlike high-beta ETFs that amplify volatility, ZLI's low-volatility screen filters out unstable equities, reducing downside exposure. Meanwhile, its international focus diversifies geographic risk, shielding investors from region-specific downturns.

For example, during the 2022 energy crisis, an overexposure to U.S. tech stocks might have led to steep losses. ZLI, by contrast, likely held steadier positions in European utilities or Japanese consumer staples, mitigating damage.

Investment Considerations

• Target Audience: Income-focused investors seeking to avoid the whipsawing of growth stocks.
• Tax Implications: Dividends from ETFs like ZLI are typically taxed as income, so consider holding in tax-advantaged accounts.
• Cost Efficiency: With a management fee of 0.35% (as of June 2025), ZLI's expenses are competitive for actively managed strategies.
• Risk Awareness: While low volatility reduces downside, it doesn't eliminate risk. Markets can still decline broadly, affecting all equities.

Final Analysis: A Cornerstone for Defensive Portfolios

In a world where volatility is the norm, ZLI's consistent dividend history and disciplined strategy make it a cornerstone holding for balanced portfolios. Its June 2025 declaration reaffirms its commitment to stability, and its upcoming payout dates are a reminder of the importance of timing in income investing.

For investors prioritizing reliable cash flows without overexposure to risk, ZLI offers a compelling solution. As markets continue to oscillate, anchoring a portfolio with low-volatility equity income—like ZLI—could prove a prudent move in turbulent times.

Disclaimer: Past performance does not guarantee future results. Always conduct thorough research or consult a financial advisor before making investment decisions.