BMO Equal Weight US Banks ETF (ZBK.TO)

US Banks. He still does not love them, but for the first time last week he exposed himself to a currency hedged version because it has currency exposure. It was a small bet because some small relative value is developing.

This is a way to play rising interest rates. Banks generate profit with interest spreads. This is a good tactical play. It could be a good hedge.

ZBK-T vs. ZUB-T. ZBK has exposure with US$ and ZUB has the currency hedged. He does not love US banks however.

Likes US banks, not currency hedged, as thinks Canadian dollar will still see weakness. US banks cheaper than Canadian right now. US banks numbers pretty good today. Investors will come out of tech and will probably will go into US banks.

With US banks, you are probably going to get a little earnings growth and dividend growth, but it won’t be spectacular, provided the US economy remains intact. Given that the US regulatory conditions are going to ease, this is really a good capital repatriation story.

BMO Equal Weight (ZBK-T) or Low Volatility US Equities (ZLU-T)?He would be buying the ZBK. They also have the ZUB, which is the Canadian hedged version. He likes the US banking sector. If you want something a little more aggressive which targets a particular sector of the market, he would be fine with ZLU.

US Financials ETF? Banks insurance companies, etc. The list is too long to mention. The US financial regional banks have underperformed relative to the broader market. Get an ETF like ZUB-T that is hedged. He thinks these are attractive. ZBK-T gives you exposure unhedged in US$.

There were 2 boosts to the sector. First was the Trump boost and the 2^nd was when they did the capital tests, which most of the banks passed with flying colours. It has been moving sideways now because everybody is not so sure if rates are going to be rising as much as had been hoped.

2 ETF’s holding US bank stocks? He holds BMO Equal Weight US Banks (ZBK-T). Thinks that conditions in the US are very positive for their banks, because he expects there will be loan growth. If the federal reserve decides to tamper a bit with the longer and of the yield curve, there will be an upward lift in the 10-year. He is bullish on the US banks and this is a way he would go.

(Top Pick Mar 14’16, Up 45%) He likes the American Banks. He likes them even if they were a bit soft. Probably interest rates will rise. He is using the unhedged version of the ETF.

An equal weight of US banks and includes some regional banks along with some of the big banks. He would prefer to own the larger market cap weighted ETF’s, such as XLF-N.

(A Top Pick Sept 23/15. Up 35.44%.) Thinks this will continue on. It is a core holding for him.

The US banking sector has been the most unloved sector. Thinks it is going to get more interesting. The big pressure on margins has been a flat yield curve, and it is hard to loan out and make any money. Thinks an overweight in banks is going to be the way to go.