TSE:ZWU
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The BMO Covered Call Utilities ETF (ZWU) is perceived as a stable investment due to its focus on regulated utility companies, which are inherently less volatile compared to other sectors. Experts highlight its appeal as a defensive play with decent yield, particularly during market instability. However, they caution that the fund's performance is heavily correlated with interest rate fluctuations, making it sensitive to rate hikes that can impact profitability. The strategy of covered calls enhances income generation but may limit capital appreciation during strong market rallies. Overall, many experts suggest it as a good long-term holding for income-seeking investors, though some recommend balancing it with more aggressive options to enhance portfolio diversification.
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
ZWU holds Canadian utilities, writes covered calls on ~50% of the portfolio. Use it if you have a neutral or range-bound view of the Canadian utilities market. If you buy near market bottom, won't participate as much in the snap-back.
If you see growth and capital appreciation on the horizon, use ZUT -- almost the same basket, but with no covered call overlay. Lower yield. Money works for you over the long haul.
In the area of the market that's quite stable, mainly because utilities are regulated by government. They do become interest-rate sensitive. Recently got caught up in the AI hype and all the power that will be needed, so got a bit ahead of themselves. Low beta. About as safe as it gets in the stock market.
When the sector outperforms, that's a warning signal. And we've had a couple of those days. Great place to hide, good yield, getting the covered writing premiums. Challenge is that because utilities are so low volatility, that premium is less.
Remember that a GIC and dividend stock have different levels of risk. Consider preferred shares and covered call ETFs like ZWC which gives broad exposure to Canadian dividends with a covered call overlay. ZWU, too, which is an alternative to fixed income, but gives equity market risk.
Very good yield. Just remember that the utilities sector is very vulnerable to interest rate changes. If rates go up, high regulation means they can't increase prices to consumers. Great way to earn tax-enhanced income.
He likes covered calls, but the big tradeoff is that you can give away upside. The option premium boosts the return.
That's a very specific question about one investor and their financial circumstances, risk tolerance, etc.
If we're going into an environment of slower economic conditions, then ZWU is likely to do a bit better. This would be due to the Canadian banks pulling back. He loves them both, great exposures. A bit concerning if all a retiree's portfolio is in just those two vehicles; there's not much diversification either within or outside of Canada.
Consider adding ZPAY, which gives you some US exposure to big banks and tech, and with a lower risk profile.
BMO Covered Call Utilities ETF is a Canadian stock, trading under the symbol ZWU-T on the Toronto Stock Exchange (ZWU-CT). It is usually referred to as TSX:ZWU or ZWU-T
In the last year, 20 stock analysts published opinions about ZWU-T. 18 analysts recommended to BUY the stock. 2 analysts recommended to SELL the stock. The latest stock analyst recommendation is . Read the latest stock experts' ratings for BMO Covered Call Utilities ETF.
BMO Covered Call Utilities ETF was recommended as a Top Pick by on . Read the latest stock experts ratings for BMO Covered Call Utilities ETF.
Earnings reports or recent company news can cause the stock price to drop. Read stock experts’ recommendations for help on deciding if you should buy, sell or hold the stock.
20 stock analysts on Stockchase covered BMO Covered Call Utilities ETF In the last year. It is a trending stock that is worth watching.
On 2025-06-27, BMO Covered Call Utilities ETF (ZWU-T) stock closed at a price of $10.93.
If you want an infrastructure ETF that holds utilities that pays Canadian dividends, with some US exposure. Is tax efficient. Has long recommended it.