Larry Berman CFA, CMT, CTA Covered Call US Banks ETF ZWK-T WAIT Jan 13, 2025

0.72% MER good.
Fundamentals of banking industry improving.
Would be a good time to buy given share price.
Lots of risk priced in.

Believes challenges remain in US banking system with higher interest rates.
Would wait to buy as bank shares fall even more.
Quality names in top US banks. 

Hard economic landing will not be good for US banks. Would be risky if economy slows down. Would not buy. Wait for markets to fall before investing. 

Would wait to buy on weakness. Economic hard landing in the horizon. Wait for impact of interest rates to be felt. 

Yield gets up to about 10% with the covered call overlay. Likes US banks, cheap relative to 5-10 year history. If economy continues to recover, banks should be there. Last 3 months, this has returned 17.5%. 

Are you looking for income, or do you just want exposure to US banks? Makes sense if you need the income. He'd argue that you'll get a better total return owning the underlying shares, or an ETF of US banks, instead of using the covered call strategy.

Likes covered call ETFs on banks and dividend payers, not tech. He prefers BMO ETFs, because they run the covered call on 50-60% of the stocks, so you still get the upside on the balance. ZWK pays around 10% dividends, but remember you don't enjoy the tax credit in Canada on these American banks

Bought this to enhance gains, but has really enhance losses. A stinker. The Silicon Valley bank collapsed hit the entire US banking sector, but this sector is a core holding. The ZWK yield remains good. He's averaged down on this instead of dumping it. Disappointed, though.

Good yield with covered call strategy. Currency exposure a concern, but likes Canadian banking sector. Expecting strong earnings going forward. Housing pressure with renewing mortgages a concern, but overall a good product for long term investors. 

Despite being better diversified, US banking space can be more volatile than Canada's. Because of covered calls, won't achieve as much capital growth as from ZBK or ZUB. As well, consider some of the active options as offered, for example, from Hamilton.