BMO EQUAL WEIGHT BANKS INDEX ETF (ZEB-T)

The caller's question was on which of these ETF's to buy for a start-up portfolio for his 20-year-old daughter. He prefers more sectors to be covered in this situation so he suggested XEI. There are more multi-asset solutions as well. He also suggested lowering the risk tolerance for a beginner investor.

Banks in general are entering a normal level. Concerns about high interest rates and defaults are mostly in the past. Banks are good to hold here if you want some dividend-paying stocks. This one has a good strategy, holding the banks in equal weight.

Good long-term hold for the past 20 years, even through all the ups and downs of markets.

Equal weight of the 6 Canadian banks. Very simple, fees have been cut. Over the long haul, outperforms ZWB. ZWB gives you more yield in the present, but diminishes upside participation in a growth market.

To choose, he asks clients about yield requirements and time horizon.

Great option to get exposure to Canadian banks. Excellent option for long term investors. 

Basket of Canadian banks, equal weight, no covered call. One-year return is 13.3%. Whereas the ZWB, which applies a covered call strategy, has a one-year return of 9.1%

(The March 2023 US regional bank meltdown was shocking, and how it happened was stupid.) He sold this recently.

Buy ZEB (no covered call) if you believe the banks will recover.

Low MER, but not a good performance the past few years. Banks hit by rising interest rates. Good time to buy given low valuation. Would recommend adding slowly. 

Only the big 6, nothing simpler. Bellwether, the biggest. BMO did cut the fee a bit to 28 bps, but there are cheaper ones. If you're considering starting a new position, try HBNK, which has a fee waiver for the next little bit. No need to swap out of ZEB if you already hold it.

Before jumping in to either, consider how much bank exposure you may already have in your other index funds.

Attractive prices for Canadian banks. Believes price levels of banks becoming attractive. Good time to buy. 

Not a bad idea to start nibbling at the Canadian banks now. Doesn't know the MER offhand, but it is relatively low. You're better off owning the banks themselves, which will eventually rebound to new highs. Prefers TD and RY.

6 largest Canadian banks on a fairly equal weight basis. Likes the Canadian banks, decent growth rate. Canadian banks have cheap valuations, especially on price to book. Not as exciting as tech or cyclical names, but you'll get more of a stable ride. Pretty good yield of 5.1%.

HBNK is an alternative. Pretty much the same makeup as ZEB, but offering 0% management fees until next summer.

Banks are down 20%+. This is what he'd buy, without the covered call, because he wants the growth at this point. Yield is around 3.5%, instead of 6%, but he doesn't care as he wants the growth, and we're going to see that with the Canadian banks despite headwinds in terms of US real estate. Canadian banks have all kinds of buffers in place. Loan loss problems in Canada are actually pretty small.