Mike PhilbrickCovered Call US Banks ETFZWK.TOPARTIAL BUYOct 29, 2025

US banks will do well, but you have to rank them. That's why he wouldn't go the route of the ETF.

Doesn't mind it here. Deregulation is still out there, but on the back burner now. US banks will be OK as long as private credit doesn't become a bigger issue (and, for now, it seems not to be). Could have some upside. Covered calls insulate you a bit.

This ETF is mainly regional banks plus others. He'd prefer the large banks. Yield is ~7% via covered calls plus dividends. Total return is better holding just underlying stocks.

Equal-weight basket of about 30 banks, but it includes a lot of regional banks. Great dividend, with a return over 3 years of just over 30%. But just owning the US banking index would have given you 85-86%. You give up upside by owning covered call strategies.

He prefers the large-cap banks, and you can usually do best by just owning them individually.

He likes US banks. Their businesses have been growing, but not the share prices. Regional banks are becoming acquisition targets again. The space is pretty good.

Covered calls dampen volatility, but they give up upside. If he was looking for upside in the US banking sector (and it's a sector he's watching very closely right now), he believes there should be some positive momentum from deregulation (though we haven't seen it yet).

He'd rather an investor use ZBK or XLF.

Likes the combination of the two. Comparing the charts shows more persistence and less drawdown with ZWE. So he'd skew more towards ZWE and the strength and diversity there. Don't underestimate Europe.

Likes it, but the question is, Do you want to be in US banks? If you expect us to go into a hard landing, US banks won't do well. Also, is this ETF taxable or not? Makes sense in a registered account. But after this recent rally be more defensive. Don't add money to banks now. It comes down to timing.

Don't enter it now, because of the overall market. It's okay to take money out of overvalued tech and put it into this, but investing money market funds, no, doesn't like the bank sector to enter.

This is an accounting item. There are 2 types of ROC, 1 good and 1 bad. The bad one is where the ETF provider is goosing up the return to be seen to be giving you more of a yield, but they end of giving you some of your own money back. That's not good. BMO doesn't do that.

To find out which one it is, you can call the ETF provider. Here's another way. Look at the underlying holdings. For example, assume they pay a dividend of 4%, there's an MER for the fund, and the option overlay generates a return of 2-3% a year. If you're being paid 6-7%, it's all good and you're getting it all. But if you're being paid 6%, but none of the underlying holdings pay 6% and there's no covered call overlay, then you're getting some of your own money back

These are covered call ETFs for banks, US (ZWK) or Canadian (ZWB). If tariffs and such are going to be negative for the economy, typically banks would underperform broader markets. He'd be cautious. Don't go out and sell right now, but be wary.

You'll probably get a better chance to buy in the next couple of months, when banks get a bit cheaper. In the meantime, ZST is a good place to park your cash.

There's been a lot of talk of Trump loosening bank regulations, which is a positive for ZWK, but if we hit a hard economic landing, the banks are not in a good space. He can't figure out Trump's end game. We could see a negative outcome, then a positive over the next 3 or so years.

ZWK is one to look at; for a hedged version, look on the BMO website. But at this point, he'd rather have broader exposure than switching from global to US. Look at ZPAY.

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.