John Hood iShares S&P/TSX Capped Financials Index ETF XFN-T COMMENT Dec 13, 2013

Canadian financials have actually underperformed year to date. It depends on what energy is going to do. This won’t be a wildly underperformer or outperformer. If the market were to pull way, way back, he thinks the banks will outperform by going down less. He prefers cherry picking insurers and banks and hopefully outperform the ETF by a couple of percents if you get them right.

An ETF for a TFSA for a long-term hold? If you were going to do financials, he would probably look at this one. You have all the banks and insurance companies in this one.

This has done very well, and he would have no problem with holding this. He doesn’t buy this because he already has exposure to banks through covered calls, which he prefers.

His concern is with the sector. Financial services make up a ridiculous amount of the TSX. The product is excellent and does what it is supposed to do, but he would not buy it because financials make up so much of the index.

This has the banks, insurance companies and mutual funds. He would be more inclined to go with BMO Covered Call Canadian Banks (ZWB-T), but if you want to be a little more diversified, there is certainly nothing wrong with this one.

Don’t use it. It is broad financials. Insurance companies will be impaired for a number of years. If you want banks go with ZEB-T, but don’t buy it here.