BMO EQL WGT US BANK HDGD TO CAD IDX ETF (ZUB.TO)

If you were going to buy banks, he would buy US banks. Prefers these from both the currency perspective and the fact that growth is a little bit stronger in the US than it is in Canada. He would prefer an ETF that focused on US regional banks, such as SPDR S&P Regional Banking (KRE-N). However, if you are going to be in a financial space, he would prefer to focus on a REIT ETF, like iShares Cohen & Steers Realty (ICF-N), or one of the investment management companies.

Hedged to the Canadian dollar. He switched to ZBK-T which is not hedged. He is positive on US banks because they are less expensive and because the regulators slapped them with such heavy fines. There will be more loan demand from improvements in housing.

From a seasonal perspective, you tend to get a bit of a pop from December to around April or so. Chart shows an uptrend through 2013 followed by a consolidation in 2014. It is now just starting to break out. He will play this for the next 4-5 months.

He likes it, but what he doesn’t like is the hedge against the Canadian dollar. He would rather have the US$ version of it, such as the SPDR Financial (XLF-N). Interest rates are eventually going to start moving up and the economy is getting a bit better, so this is the type of name you want to own longer-term, going out the next 2-3 years.

Has done very well and is up over 15% over the last year. Likes the US banks. There is more opportunity in this space going forward. This is trading at 1.4X versus Canadian banks that are trading at 1.8X.

From most of his readings, the US financial sector is still lagging on a five-year perspective, versus the other sectors. Probably represents some pretty good value.

This is the only choice for Canadians for financial exposure as the insurance companies are having a real problem getting return on equity.

Seasonally banks do okay until around June-July, and then fade out. Chart shows that it broke down through the trendline, but just because it breaks the trendline doesn’t mean it is game over. It is now trying to consolidate. If it breaks out, he will be buying this again.

BMO Eq Wt US Banks Hedged CAD (ZUB-T) or BMO Equal Weight US Banks (ZBK-T)? Thinks the US banks will probably do pretty good here. US housing is still increasing and US banks is a great way to play that. ZUB would definitely be the way to play it. Regarding hedging, trying to predict currencies is darn near impossible.

This is hedged to the Cdn$ and he is indifferent as to hedges. He likes US banks. They have done very, very well in the past 5 years. Equal weight is probably a good simple intuitive way of being able to play that sector.

We’ve already seen 4% off the highs. If we are going to see 10% in this correction, he would look to buy 5-8% less than it is today. Dividends in the US banks are not high.

Likes the US banks and he might leave this one for a while. When you have short-term interest rates so low and bonds in a very steep yield curve, that is very good for banks and earnings. Also, if you think there is going to be a good housing market in the US, there should be some loan and mortgage growth.

US equal weight bank product. A hedged product, low cost. He heard that BMO will come out with an unhedged version in the near future (ZBK-T). He tends not to play sectors but if you want to, this is an excellent product.

XLF-N or ZUB-T for a rising US$? Feels the Cdn$ is going to outperform the US$ next year. Canada will benefit from a stronger US economy. If you are looking for a rising US$, the choice would be ZUB, but he is not expecting a rise in the US$. As this is hedged to the Cdn$, you are not going to get any benefit by buying US banks, you might as well just go Buy a US-based ETF that trades on the NYS.

(A Top Pick Jan 9/13. 28.52%.) These are mostly regional banks. This was a no-brainer. We had the issue of home building in the US and it was an area that was poised to make a big move. Still likes.