David CockfieldBMO Equal Weight US Banks ETFZBK.TODON'T BUYNov 30, 2018

BMO has a hedged and an unhedged version. Both are equal weight. More diversified to include regional banks.

There's also UBNK, also an equal weighting. Much more concentrated in the big banks only.

He's watching the US banking sector very closely right now. Believes there should be some positive momentum from deregulation, but we haven't seen it yet. Likes this ETF.

(Note the shorter timeframe.)  This area of the market is supported by strong capital ratios and a pretty resilient consumer. Yield curve is slowly steepening. Modest loan growth, buybacks are returning. Due for a banner year and will benefit from tech innovations from blockchain. Keep holding.

Largest in the category. ZBK is unhedged, but there's a hedged version as well (ZUB). He'd opt to start hedging risk away a bit more, given what seems a concerted effort to weaken the USD. Gives you diversification in the US banks, instead of Canadian banks, as it's a different market and different economy. 
 
Banks are very sensitive to the economy, and we're in a recessionary period. He'd wait for positive market follow throughs before allocating capital. If you're in it for the long term, you could buy this on the pullback. Interestingly, US banks are down about 21%, whereas Canadian banks (as in ZEB) are down 9%.

It holds the giant banks, now hitting all-time highs. It benefits from economic expansion, rising interest rates, and a new president that is more business-friendly.

He's held it in the past, not now. Banks have lagged for a long time, but now doing really well. The first phase of the upward swing was due to interest-sensitives doing better with lower interest rates. The second phase is driven by post-election hopes for deregulation and economy-friendly moves.

Despite being better diversified, US banking space can be more volatile than Canada's. Achieves more capital growth then an ETF with a covered call strategy. As well, consider some of the active options as offered, for example, from Hamilton.

Both good, but ZBK gives US dollar exposure.

The US bank sector of course has had a tough year, and the outlook will largely depend on the economy and rates. However, the fund now has an average P/E of 5.5X and an indicated yield of 3.49%. We think this is cheap enough that investors can slowly start buying the sector now. 
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Higher rates can be good for the financial sector. 
The main concern is whether rates push us into recession. 
Certainly a possibility, but right now the economy is much stronger than most expected, and thus banks should be OK for a while. 
At some point, the narrative is going to shift from higher rates to corporate earnings, and corporate earnings have been OK. 
ZBK we think can be held, but like any equity is not risk-free. 
We think holders should have at least an 18 month timeframe here.  
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He wouldn't buy the covered call. If you like American banks, buy them individually. He would rather buy ZBK which is a play on American banks without a covered call. Basically, you're paying a premium for covered calls..