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finance february

Trader James Riy at the New York Stock ExchangeRichard Drew/The Associated Press

This year's turn for the volatile has undoubtedly had an effect on risk tolerance. Many investors are looking for safety as they wait to see how a cloud of adverse catalysts plays out. Last week, we presented a number of conservative ETFs that might offer relative stability in turbulent times. But there are also investors still scouring for growth options. So for this instalment of Finance February, we canvassed investing professionals for their top picks among aggressive ETFs.

Michael Bowman

Portfolio manager

Wickham Investment Counsel

1. Market Vectors Gaming ETF (BJK-NYSE)

Companies in this ETF must derive at least half their revenues from gaming and have a market capitalization of at least $200-million (U.S.). The fund is weighted most heavily in U.S.-based stocks, but has significant exposure to Macau.

2. PowerShares Buyback

Achievers Portfolio (PKW-NYSE)Companies in this ETF must have reduced outstanding share count by at least 5 per cent over the trailing year. Share repurchases have exploded in popularity since the recession as a way to deploy cash reserves and reward shareholders by increasing earnings per share, thus boosting stock price. Last year, this ETF trounced even the red-hot S&P 500 with a 45-per-cent increase in share price.

3. Guggenheim Spin-Off ETF (CSD-NYSE)

This ETF includes companies that have been spun off from their parent companies within the past 30 months, but not within the past six months. Most of the weightings are in small- and mid-cap companies that are newly independent. "Numerous academic studies suggest that most spinoff companies have experienced significant capital appreciation," Mr. Bowman said.

John DeGoey

Vice-president and associate

portfolio manager, Burgeonvest Bick Securities

1. Vanguard FTSE Emerging

Markets Index ETF (VEE-TSX)This ETF offers exposure to stocks from across the emerging markets universe. "This is an under-owned part of the world that has been beaten up lately," Mr. DeGoey said. Latin American companies make up the fund's biggest weighting.

2. iShares Broad Commodity

Index ETF (CBR-TSX)This ETF tracks the Morningstar Global Long/Flat Commodity Index, which includes a broad range of "traditional inflation hedges," Mr. DeGoey said.

"It's volatile, but a really good diversifier due to negative correlation to most traditional equities."

3. Vanguard U.S. Total Market

Index ETF (VUN-TSX)A one-stop security for getting exposure to U.S. stocks, this ETF gives access to hundreds of U.S. companies of all sizes. "As an added bonus, it is not hedged, so can take advantage of the falling [Canadian dollar]," Mr. DeGoey said. It also has a rock-bottom management fee of 0.15 per cent.

Deborah Frame

Vice-president of investments,

Cougar Global Investments

1. Horizons U.S. Dollar Currency ETF (DLR-TSX)

Many expect the loonie to continue to fall against the U.S. dollar, which this ETF banks on by investing in U.S. cash and equivalents. "As the U.S. recovery takes hold and demonstrates more robustness than other major economies, particularly emerging markets, capital is expected to continue to flow out of those economies and their currencies and into the U.S. dollar," Ms. Frame said.

2. BMO Junior Oil Index ETF (ZJO-TSX)

This ETF tracks smaller companies in the oil and gas production, equipment, services and distribution sectors. It is up more than 20 per cent over the last year, but has also been highly volatile.

3. iShares Core S&P Small-Cap ETF (IJR-NYSE)

This ETF is a play on the "continuing recovery of the U.S. economy," Ms. Frame said. Eligible U.S. stocks have a market capitalization between $300-million and $1-billion. Investors also get unhedged exposure to U.S. currency appreciation against the Canadian dollar.

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