BMO Equal Weight Utilities Index ETF

ZUT-T

An ETF for utilities. A great defensive sector with amazing performance lately. XUT-T is good, but 60% is in the top 4 holdings (inculding Fortis and Algonquin); 4% yield and 55 basis point cost. ZUT-T is more diversified and equal-weight. ZWU is also equal weight but does covered calls to create extra income, which sells future income for gains today; yields 6%. Given the strong performance of utilities in the past year, covered calls have lagged.

Prefers the BMO Covered Call Utilities (ZWU-T), which has US utilities as well, giving better diversification. The problem with utilities is that they are very, very interest rate sensitive.

He likes the utility space, but about 2 months ago he reduced his exposure. Utilities are very good instruments for providing yield, and there is a strong demand. Some have had a real run, but he doesn’t believe this basket as a whole represents the growth opportunities that the multiple is trading at. He’d rather Buy individual stocks. His favourite is Emera (EMA-T).

If your view is that utilities is going to be a good place to be in Canada for the foreseeable future, and you want to diversify away from energy and financials, it is a good holding. Be aware that some yields may not be sustainable for the long-term. Dividend yield of 4.1%.

A few stocks are responsible for most of the movement in the valuation. This ETF offers diversification, unless you have some special talent for picking the best stocks of the sector. If you have only a few of the stocks, then you are more subject to volatility. This is an equal weighted ETF and he likes it for that reason.

Tracks the Canadian Utilities sub index. It is conservative and not as volatile as the rest of the market. Diversify the risk away from owning one utility.

On utilities, he prefers the BMO Covered Call Utilities (ZWU-T), because of the covered call. It will not only get you a better yield, but will also take out a little bit of the volatility.

ZWU-T vs. ZUT-T. ZUT-T is equal weight utilities in Canada. ZWU-T is 80% Canada and utilities also include pipelines and telcos and it has a covered call overlay. He prefers this because it is more diversified and has the covered call overlay.

It is equal weight so you get a little more torque. It boosts the income portion of your portfolio. The relative performance has been pretty good. About 5% yield. We have support here.

Stock vs. stock. ZUT-T vs. ZEB-T. Both give you around a 4% yield. Banks have outperformed the past year. He would prefer ZWU-T for playing utilities. He would get Utilities AND Banks.

Canadian utility ETF? There are 2 of them. One is the BMO Equal Way Utilities Index CAD (ZUT-T) and the other is with iShares. He prefers this one because they are writing covered calls and can generate a little bit more income.

Allow Puts to be bought for protection? This could be an interesting idea, but the problem is that this ETF doesn’t have options. What you could do to protect gains is to just put in a Stop order.

Unfortunately, when interest rates are rising, utilities tend not to do well because they will not raise their dividends as fast as a bank would. Wouldn’t expect this one to do much of anything.

Down about 4% on the year, hurt by interest rate environment. Utilities are a relatively small part of the Canadian stock market. It will be hurt with the rate hike.