BMO Covered Call Canadian Banks ETF (ZWB-T)
TSE:ZWB
20.23
0.08
(0.37%) 1d
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Technical Analysis
Buy, Sell or Hold?
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This summary was created by AI, based on 17 opinions in the last 12 months.
The BMO Covered Call Canadian Banks ETF (ZWB) offers a yield of approximately 7.1% and is considered to be fairly tax-efficient due to its distributions and return of capital (ROC). Experts have noted that while ZWB is a solid option for income-focused investors, its growth potential may be limited in a rising market, as covered call strategies can lead to missed upside when individual bank stocks perform exceptionally well. There is a general concern regarding the stability of Canadian banks, post-TD fiasco, and while some experts express caution about a sensitive economic environment, others highlight that ZWB remains a reliable income source. Comparisons with alternative ETFs like ZEB and ZWU have led to discussions on diversification and risk tolerance, suggesting that investors consider their overall portfolio strategy.
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.
He doesn't see a hard recession coming, though any recession in Canada will be harder than in the US. In a hard recession, Canadian banks can easily fall 20-30%. A lot of the rally in recent months has been the recognition of aggressive rate cuts by the Bank of Canada. A lot of that's already in the market, and you have more downside risk than upside potential in terms of the next year or two.
That doesn't make it a bad ETF, but the question is what are you going to put your money in to generate the same kind of yield? He'd suggest considering a tilt more toward ZWU. This would give you diversification, plus let you keep your high-dividend yield with tax-friendly exposure for Canadian taxpayers.
A put/write covered call income-focused strategy using options can generate extra income. ZWB is covered call banks. If you're bullish on the market, ZWB will give you more upside than ZPAY. If you're conservative on the market, and you think there's going to be more volatility, ZPAY will do better for you.
Right now in his dividend fund, he owns ZPAY but not ZWB.
Both hold financials,but ZWB uses covered calls. HMAX has performed a little better and offers a little more yield. ZWB writes only half the securities, so it takes in less yield, but gets more upside capture. The price return is 11% on ZWB in the past year vs. HMAX's 6%, but the total return is close. However, ZWB pays you you more of a yield. nearly 7%, but gives less growth.
Different types of return of capital. The difference tax-wise is that when a strategy is giving you a certain yield, that they're not earning, they're giving you back your own money. That's the one that's dilutive to your net asset price. That's not what happens in this ETF.
If the underlying ETF is generating dividends and incremental income on a covered call overlay, and paying those out, it's not an erosion of your income.
Sometimes, there has to be a tiny bit of ROC when very recent investors to a fund are owed their dividend, but their investment hasn't yet had enough time to generate what they're owed. So there might be a small ROC in the interests of fairness to all unitholders of the fund.
You need a higher return than a bond is going to give you today to keep up with inflation and grow your savings. Alternative ETFs such as ZWU, VCNS, ZWB, ZWC, and PJAN are what's needed to protect your portfolio, rather than conventional bonds.
These are what you need to generate the income you'll need for retirement, to get a real return on your investment, more than just protection of principal.
Popular, high distribution yield. The "W" in the ticker symbol stands for option overwriting, so a covered call ETF that writes call options on 50% of the portfolio. Gives you more yield in the present, but diminishes upside participation in a growth market.
ZEB is an equal weight of the 6 Canadian banks. Very simple, fees have been cut. Over the long haul, outperforms ZWB.
To choose, he asks clients about yield requirements and time horizon.
Basket of Canadian banks. Getting the yield from the banks, and overlaying an option premium on top of that. With the covered call, there's the risk of the ETF portfolio being struck out of its holdings too early. If you need the income, then a covered call strategy may make sense. If you don't need the income, don't get attracted by the yield itself.
Often the underlying securities perform better than the ETF. See ZEB.
If he was going to own national banks, he'd most likely own RY or NA. And if not, then the ZWB strategy is a good one; covered calls give you more upside; yield's around 7.5%; pretty good income stream.
Not a ton of growth in the Canadian market, and not a ton of growth in Canadian banks. Own them for the income more than upside growth.
BMO Covered Call Canadian Banks ETF(ZWB-T) Rating
Ranking : 5 out of 5
Bullish - Buy Signals / Votes : 10
Neutral - Hold Signals / Votes : 10
Bearish - Sell Signals / Votes : 10
Total Signals / Votes : 30
BMO Covered Call Canadian Banks ETF(ZWB-T) Frequently Asked Questions
What is BMO Covered Call Canadian Banks ETF stock symbol?
BMO Covered Call Canadian Banks ETF is a Canadian stock, trading under the symbol ZWB-T on the Toronto Stock Exchange (ZWB-CT). It is usually referred to as TSX:ZWB or ZWB-T
Is BMO Covered Call Canadian Banks ETF a buy or a sell?
In the last year, 30 stock analysts published opinions about ZWB-T. 10 analysts recommended to BUY the stock. 10 analysts recommended to SELL the stock. The latest stock analyst recommendation is . Read the latest stock experts' ratings for BMO Covered Call Canadian Banks ETF.
Is BMO Covered Call Canadian Banks ETF a good investment or a top pick?
BMO Covered Call Canadian Banks ETF was recommended as a Top Pick by on . Read the latest stock experts ratings for BMO Covered Call Canadian Banks ETF.
Why is BMO Covered Call Canadian Banks ETF stock dropping?
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.
Is BMO Covered Call Canadian Banks ETF worth watching?
30 stock analysts on Stockchase covered BMO Covered Call Canadian Banks ETF In the last year. It is a trending stock that is worth watching.
What is BMO Covered Call Canadian Banks ETF stock price?
On 2025-05-28, BMO Covered Call Canadian Banks ETF (ZWB-T) stock closed at a price of $20.225.
They're popular, because people want the extra yield, but they work only in some environments. Better when you expects markets to go down for 6-12 months (a correction). In rapid declines, like Covid, you get only some protection. But in a strong market, you give you the upside and lag the market a lot. Just owning ZEB since 2011, you would have made 10.71% annualized; ZWB 8.34%. SO, use ZWB defensively at some point after a correction, say 10% or 15% down. Use ZEB in a strong rally. During strong declines, both ETFs fall roughly the same, but during the recent strong rally, ZEB was 16.98% and ZWB 14.85%.