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

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BMO Covered Call Canadian Banks ETF (ZWB.TO)

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28.91

+0.02 (0.07%)

as of Jun 5, 2026, 7:58:02 pm Market Open.

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Investor Insights

Jun 6, 2026, 12:00 am

This summary was created by AI, based on 9 opinions in the last 12 months.

The BMO Covered Call Canadian Banks ETF (ZWB) has received a mix of reviews from various experts, highlighting both its benefits and drawbacks. The ETF, which is concentrated in Canadian banks and designed to generate income through a covered call strategy, has seen a notable increase of approximately 52% over the last year, albeit less than the equal-weighted counterpart, ZEB, which rose by 63%. While many experts appreciate the extra layer of yield that the covered call provides, they also caution against investing heavily at this stage in the economic cycle due to potential downturns affecting bank performance. Concerns about underperformance relative to the underlying banks, and the inherent trade-offs of call writing, such as capping upside potential, were also articulated. Overall, ZWB is seen as a long-term holding for those looking for income, but caution is advised regarding new investments given current market conditions.

Consensus

Cautious

Valuation

Fair Value

Similar

ZEB-T

COMMENT

vs. ZWC ZWC covers the general Canadian market vs. ZWB which covers Canadian banks. If you think banks will do well, ZWB may lag the market, but if the market tumbles, this will fall less.

PARTIAL BUY

He’s more neutral on the banks. However, if you really want to invest in the banks, ZWB has a better yield because of the covered calls. If the bank goes sideways, it is a good way to play it. A good dividend.

TOP PICK

The one covered call he didn't sell. It's always been a good performer and it's a good way to have income. It pays a 5% yield. There is possible capital gains and dividends.

PAST TOP PICK

(A Top Pick May 22/18, Down 3%) He likes the Canadian Banks. Particularly the ones with the US exposure. Nice dividend yield. Core holding for him. If it drops he would re-balance and buy more.

COMMENT

Why are Canadian banks out of favour? There's renewed short interest in Canadian banks now. Also, there's economic uncertainty in Canada (flat rates, weak growth). You don't get much from the covered call. He'd rather buy the individual banks and collect their dividends. He's not worried about others shorting Canadian banks. You can dip your toe in now and dollar-cost average down over time.

BUY ON WEAKNESS

He's bullish the Canadian banks, which hold on during the correction until the tail end when they caught in the overall sell-off. The problem with the covered-call is they underperform the banks themselves. He hasn't bought this and recommends the straight bank ETF, which has outperformed ZWB. But if you think the banks will fall or go sideways, then buy ZWB.

WATCH

This is always a core holding for him and it provides a 5.25% yield. He is concerned in this market right now and he may not own this soon. He is afraid of giving away the upside if the market rallies. He might prefer to own the banks stocks outright -- without selling covered calls.

HOLD

A BMO covered call ETF on Canadian banks. It is not a trading vehicle. The purpose of a covered call ETF is to harvest the premiums. This has gone down by less than an ETF just focused on banks with no covered calls. This is a longer term vehicle. Get it if you expect banks to be range bound or go up a little, but if they were going to rocket up you would not want the covered calls.

BUY

Buy bank stocks as bond proxies? He likes Canadian banks, especially with covered calls like ZWB. Pricey at 75 basis points, but he has directly seen the value that BMO provides to this ETF. This isn't a bond substitute, but he's rather be paid 4% (dividend) after some dopey high-yield fund or ETF. But he wouldn't hold more than a 10% weighting in Canadian banks.

DON'T BUY

ZWU-T vs. ZWB-T. Rising interest rates are positive for revenues for banks, not profits necessarily. The yield curve is flattening and this is not good for banks. He prefers ZWU-t to ZWB-T.

COMMENT

ZWE-T vs. ZWU-T vs. ZWB-T. A 100% stake in anything is generally a bad idea. These three give you 2/3rds of your portfolio seeking dividends in Canada. He would add ZPW-T for US put writes. ZWH-T would give you a broader exposure. He would underweight Canada.

HOLD

ZWB-T vs. ZWU-T. ZWU-T is high dividend covered call, 70% US. It is very interest rate sensitive. ZWB-T is banks and so when interest rates are rising they tend to do better. They are counter balanced so putting money into both is a good pairing, generally. He owns no Canadian banks because he thinks they are expensive right now, however.

SELL

ZWU vs. ZWB? Be careful now. If interest rates rise, be sure you’re in the highest credit quality area, and he’s not sure this is the one. Has done incredibly well as interests rate have gone down. The back side is that interest rates start going up you won’t get any downside protection. If it’s in a TFSA, where you don’t have to worry about capital gains, you may want to bring it down a little bit.

COMMENT

ZWB-T vs. ZEB-T. ZEB-T gives you the max growth of the 6 banks. ZWB-T enhances your yield and is more defensive. The covered call strategies have a little higher MER. The difference between them is the implied volatility.

COMMENT

Covered call trading is best for a flat or slightly down trending market. If you hold it in a strong up trending market, you are cutting off the top all the time on the rally, but you are still susceptible to large equity draw downs.

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BMO Covered Call Canadian Banks ETF (ZWB.TO)