Richard Orrell’s Top Picks for June 12, 2026

Richard Orrell, Portfolio Manager, RN Croft Financial Group

Focus: Exchange-traded funds (ETFs)

Top Picks: BMO USA High-Quality ETF, Invesco S&P 500 GARP ETF, Global X Active Canadian Municipal Bond ETF

MARKET OUTLOOK:

Navigation through rotation and policy shifts

U.S. markets: structural rotation amid index volatility

The upcoming SpaceX IPO will serve as a critical liquidity barometer, especially with Anthropic and OpenAI on the horizon. While macro direction remains uncertain, recent price action reveals broad-based sector rotation rather than outright selling. Despite mega-cap tech dragging major indices into the red, multiple sectors have closed positive despite negative closes by the index. This underlying strength suggests medium-term momentum remains intact, though midterm years historically bring higher volatility and muted returns.

I see distinct, short-term alpha opportunities in two U.S. sectors:

• Healthcare (XLV): A compelling “catch-up” trade capitalized on AI spillover effects.
• Financials (XLF): Positioned to benefit from deregulation and an improving fee environment.

Monetary policy outlook

• Bank of Canada: The BoC held rates steady while downplaying technical recession risks. This preserves policy ammunition for more severe scenarios and prevents an unfavorable widening of the U.S.-Canada interest rate spread.
• U.S. Federal Reserve: Conversely, U.S. futures are pricing in a 25 basis points hike to combat inflation. Near-term market anxiety is being compounded by uncertainty ahead of new U.S. Fed Chair Kevin Warsh’s inaugural address next week.

Canadian wealth management: ETF proliferation

The Canadian ETF landscape expanded by 44 new listings in May alone, driven by institutions wrapping mutual funds into ETFs to lower investor costs and retain assets.

While structurally positive, this proliferation increases the regulatory burden for know your product and suitability requirements. With a crowded product shelf, rigorous due diligence is vital; hidden underlying overlap between ETFs can inadvertently introduce severe concentration risk to portfolios.

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TOP PICKS:

BMO USA High-Quality ETF (ZUQ TSX)

The ETF tracks an index that aims to capture the performance of quality growth stocks by identifying stocks with high quality scores based on three main fundamental variables: high return on equity (ROE), stable year-over-year earnings growth and low financial leverage. Index members are capped at five per cent on rebalancing. There are 120 positions in the ETF. Among the top positions are Apple, Nvidia, Eli Lilly, Meta and Visa. Eli Lilly is a notable overweight compared to the MSCI USA universe.

Invesco S&P 500 GARP ETF (SPGP NYSEARCA)

The ETF tracks an index that aims to capture the performance of 75 stocks within the S&P 500 index that have been identified as having the highest “growth scores” and “quality and value composite scores”. The growth score is calculated by utilizing the three-year earnings per share growth rate and three-year sales per share growth. The “quality and value composite score” utilizes an average of three metrics: financial leverage ratio, return on equity, and earnings-to-price ratio. The Index constituents are weighted based on their growth scores. I like this strategy as a compliment to other equity ETFs that may have higher technology exposure. We could see reversion to the mean on growth stocks. The management expense ratio (MER) is around 0.36 per cent and it trades in U.S. dollars.

Global X Active Canadian Municipal Bond ETF (HMP TSX)

This ETF is for the fixed income portion of your portfolio. This ETF invests in municipal bonds with an current average credit quality of AA-, the 12-month trailing yield is 3.19 per cent so nearly one per cent higher that government rates. The strategy is active and historically has outperformed the benchmark in most years. This is a good use of an ETF structure since municipal bonds tend to be of smaller issuance and not as accessible for individual investors. The distribution is primarily interest income so this would be suited for a registered account. We recently added this ETF to some of our conservative client portfolios.

PAST PICKS: JULY 22, 2025

Invesco NASDAQ 100 Index ETF (QQC.F TSX)

Then: $180.64

Now: $227.11

Return: 26%

Total Return: 26%

Global X Artificial Intelligence Semiconductor Index ETF (CHPS TSX)

Then: $44.57

Now: $88.89

Return: 99%

Total Return: 99%

iShares Core S&P 500 Index ETF (CAD – Hedged) (XSP TSX)

Then: $64.87

Now: $74.77

Return: 15%

Total Return: 16%

Total Return Average: 47%