BMO Covered Call Canadian Banks ETF (ZWB.TO)…

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BMO Covered Call Canadian Banks ETF (ZWB.TO)

30.87

+0.16 (0.52%)

as of Jul 3, 2026, 7:58:42 pm Market Open.

328 watching

Investor Insights

Jul 5, 2026, 12:00 am

This summary was created by AI, based on 8 opinions in the last 12 months.

The BMO Covered Call Canadian Banks ETF (ZWB) has garnered mixed reviews from experts, with some praising its covered call strategy and yield, while others express caution regarding its concentration in the Canadian banking sector and current economic conditions. The ETF has performed well, up approximately 52% over the last year, but is noted to be underperforming relative to the equal-weighted ZEB ETF, which has seen a 63% gain. Experts highlight the defensive nature of the covered call overlay, though it comes with trade-offs in terms of upside potential. They advise against adding new capital at this juncture due to concerns over a potential economic downturn that could impact Canadian banks significantly, suggesting a cautious long-term outlook while emphasizing the importance of diversification with both covered and non-covered call strategies.

Consensus

Cautious

Valuation

Fair Value

Similar

ZEB-T

PAST TOP PICK

(A Top Pick Apr 08/21, Up 51%)Note: His 3rd past pick was cash. It comes down to buying at the right. Have a strategy before volatility hits, which is what he did in April 2020. Good returns.

COMMENT

The profitability of banks is net interest margins. The steepening of the yield curve has led to banks being more profitable. A flattening yield curve is a headwind. We are not there yet. When the yield curve starts to flatten. ZEB is good to capture upside, and ZWB for when it will go sideways to down.

COMMENT

Different ways to play the Canadian banks. There is some volatility but there is yield to compensate.

COMMENT

ZEB is equal weight where as ZWB is equal weight banks with a covered call overlay. When you think the markets will go sideways or down, covered calls will perform better. However, the covered call gives away some of the upside potential so if you are bullish on growth, forego the covered call.

COMMENT

The caller requested suggestions for higher dividend ETF. There's a number of ways to play it. Go to an ETF website to see which ETF fits your profile. Covered calls provide higher dividends.

BUY

There are so many ETFs, so it depends what you're looking for. A Canadian bank ETF from any vendor will give you income and growth, like ZWB-T. An ETF reduces volatility vs. owning individual stocks.

COMMENT

There are two elements to covered call strategies. There is the underlying stocks, and then the option premium. Volatility will continue to be high for the next couple years. Premiums will remain elevated. FIE pays back a part of your money back. There are a couple different elements to consider.

COMMENT

Canadian banks are much better run and offer good dividend yields compared to elsewhere in the world. There is some risk in the housing sector and some challenges to growth. He would favour ZWB right now. Once markets correct 10-15%, get out of the ZWB and get ZEB for the growth.

COMMENT

The rule of thumb is, if you are bullish, then you don't want the headwind of the covered call overlay. If you are concerned about sideways or downside risk, then you want the additional yield from the covered call.

DON'T BUY

ZWB vs. ZWC He'd stay away from financial services, as with the low rates it's hard for the banks to be profitable. He'd rather go with the broader index. The more volatile a price, the higher the premium you'll get on a covered call. The covered call strategy here hasn't delivered in this volatile environment.

BUY

Not a bad way to play the banks. Banks have underperformed. Historically, they've done quite well in August and September. But now they're struggling. So until they start to show some real outperformance, the covered call is preferable to owning them outright.

COMMENT

ZWC vs. ZWB Both offer additional income through covered calls. ZWC yields 8.4% plus the dividend and premium from the covered call strategy. ZWB (Canadian banks) pays 6.5%. Both you pay 72 basis points in MER. ZWC is more diverse with banks, pipelines and telecoms so he prefers ZWC. Warning: long-term, covered calls can lag the underlying securities if there's a bull market in those securities. In an up market, he prefers the stocks themselves or other ETFs.

TOP PICK

This has tracked well with the market, despite having covered calls. He has worked closely with the managers and has even sat on their trading desk. Its MER is 0.75%. About 50% does not have covered calls sold against the holdings. Yield 7.21%

COMMENT

ZWB-T vs. ZEB-T. If your view on the banks is sideways to down a little bit, then ZWB-T is the better holding but if you are bullish on the banks then you don’t want the covered calls. He prefers ZEB-T right now because he wants all the price capture upside when the banks recover.

DON'T BUY

Definitely be in covered calls now to lower volatility. But he wouldn't buy banks because interest rates are so low. He's avoiding banks.

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BMO Covered Call Canadian Banks ETF (ZWB.TO)