Larry Berman CFA, CMT, CTA BMO EQUAL WEIGHT BANKS INDEX ETF ZEB-T BUY Jul 15, 2024

Buy ZEB (no covered call) if you believe the banks will recover.

(The March 2023 US regional bank meltdown was shocking, and how it happened was stupid.) He sold this recently.

Basket of Canadian banks, equal weight, no covered call. One-year return is 13.3%. Whereas the ZWB, which applies a covered call strategy, has a one-year return of 9.1%

Equal weight of the 6 Canadian banks. Very simple, fees have been cut. Over the long haul, outperforms ZWB. ZWB gives you more yield in the present, but diminishes upside participation in a growth market.

To choose, he asks clients about yield requirements and time horizon.

Good long-term hold for the past 20 years, even through all the ups and downs of markets.

Banks in general are entering a normal level. Concerns about high interest rates and defaults are mostly in the past. Banks are good to hold here if you want some dividend-paying stocks. This one has a good strategy, holding the banks in equal weight.

The caller's question was on which of these ETF's to buy for a start-up portfolio for his 20-year-old daughter. He prefers more sectors to be covered in this situation so he suggested XEI. There are more multi-asset solutions as well. He also suggested lowering the risk tolerance for a beginner investor.

Basket of Canadian banks, no covered call. Past year's total return is nearly 14%. As well, better return over 3 years than ZWB.

Over the past year, total return for ZWB was ~9.5%.

Because there's no covered call strategy, if we get into a bull market you get full advantage of the upside. Upside hasn't been "called away" to provide an income stream. Perhaps lower income, but more capital appreciation along the way.