BMO Covered Call Utilities ETF | StockChase
67
BMO Covered Call Utilities ETF (ZWU-T)

Last Price Recorded: $14.0100 on 2017-12-13

ON STOCKCHASE SINCE Dec 2011

E.T.F.'s
67
BMO Covered Call Utilities ETF (ZWU-T)

Last Price Recorded: $14.0100 on 2017-12-13

ON STOCKCHASE SINCE Dec 2011

E.T.F.'s

BMO Covered Call Utilities ETF


Signal Opinion Expert
COMMENT

A Covered Call ETF. This is a mixed bag of traditional utilities and pipeline utilities. A steady type of name and you are going to get extra yield from the covered call writing. An interesting name. It probably won’t give you the growth he is looking for in his portfolios. If you are in an area where markets are moving higher, you want to be in the underlying securities, not a covered call strategy.

E.T.F.'s

A Covered Call ETF. This is a mixed bag of traditional utilities and pipeline utilities. A steady type of name and you are going to get extra yield from the covered call writing. An interesting name. It probably won’t give you the growth he is looking for in his portfolios. If you are in an area where markets are moving higher, you want to be in the underlying securities, not a covered call strategy.

E.T.F.'s
Stan Wong

Director & Portfolio Manager, Private Wealth Manag...

PricePrice
$13.970
Owned Owned
Unknown

BUY

He loves ZWB-T and it is a great way to hold the banks.  But he sold out, taking profits, putting it into ZWU-T.  This is a lot more interest rate sensitive.  ZWU-T will outperform in a market correction as utilities are more defensive.

E.T.F.'s

He loves ZWB-T and it is a great way to hold the banks.  But he sold out, taking profits, putting it into ZWU-T.  This is a lot more interest rate sensitive.  ZWU-T will outperform in a market correction as utilities are more defensive.

E.T.F.'s
Larry Berman CFA, CMT, CTA

Chief Investment Officer, Partner, ETF Capital Manageme...

PricePrice
$13.980
Owned Owned
Yes

COMMENT

Good for a TFSA?This ETF holds a range of utilities and pays an excellent return. Essentially you are buying a portfolio of Canadian utilities. If you want a nice cash flow in your portfolio, it gives you diversification.

E.T.F.'s

Good for a TFSA?This ETF holds a range of utilities and pays an excellent return. Essentially you are buying a portfolio of Canadian utilities. If you want a nice cash flow in your portfolio, it gives you diversification.

E.T.F.'s
David Cockfield

Managing Director, Northland Wealth Man...

PricePrice
$13.910
Owned Owned
Yes

COMMENT

The .U units are in US$ and not a lot of people are using them.  Its liquidity is that of the underlying securities.  The market maker creates more units as required.  There is no need to worry about liquidity just because the ETF is thinly traded.

E.T.F.'s

The .U units are in US$ and not a lot of people are using them.  Its liquidity is that of the underlying securities.  The market maker creates more units as required.  There is no need to worry about liquidity just because the ETF is thinly traded.

E.T.F.'s
Larry Berman CFA, CMT, CTA

Chief Investment Officer, Partner, ETF Capital Manageme...

PricePrice
$14.000
Owned Owned
Unknown

WAIT

There are 20 securities in this with roughly 5% in each. Is 10%-15% of that too much to have in one Security? This pays a very nice yield. Originally it was just Canadian utilities, but now they have some US stuff as well. Utilities are very subject to interest rate changes, and is something to keep in mind. He doesn’t know about going with 15%, but you are probably fine with 5%-10%. With a possible increase in interest rates, you might want to wait a few days.

E.T.F.'s

There are 20 securities in this with roughly 5% in each. Is 10%-15% of that too much to have in one Security? This pays a very nice yield. Originally it was just Canadian utilities, but now they have some US stuff as well. Utilities are very subject to interest rate changes, and is something to keep in mind. He doesn’t know about going with 15%, but you are probably fine with 5%-10%. With a possible increase in interest rates, you might want to wait a few days.

E.T.F.'s
John Hood

President & Portfolio Manager, J. C Hood Investment...

PricePrice
$13.820
Owned Owned
Unknown

BUY on WEAKNESS

He likes it and holds it in a dividend fund, using it in a defensive way.  It has a covered call overlay.  Unfortunately the premium from the covered call strategy is less than desirable because volatility has been so low for so long.  We are seeing a little sell off because of a sensitivity to interest rates.  If it falls another couple of percent he will go back to accumulating it.

E.T.F.'s

He likes it and holds it in a dividend fund, using it in a defensive way.  It has a covered call overlay.  Unfortunately the premium from the covered call strategy is less than desirable because volatility has been so low for so long.  We are seeing a little sell off because of a sensitivity to interest rates.  If it falls another couple of percent he will go back to accumulating it.

E.T.F.'s
Larry Berman CFA, CMT, CTA

Chief Investment Officer, Partner, ETF Capital Manageme...

PricePrice
$13.750
Owned Owned
Yes

BUY

A Covered call ETF which clients gravitate to.  ZUT-T is the non-covered call overlay.  Over the very long haul you may get higher returns with ZUT-T than ZWU-T.  If you need the yield, then there is nothing wrong with the covered call ETF, ZWU-T.  Consider XIC-T also.

E.T.F.'s

A Covered call ETF which clients gravitate to.  ZUT-T is the non-covered call overlay.  Over the very long haul you may get higher returns with ZUT-T than ZWU-T.  If you need the yield, then there is nothing wrong with the covered call ETF, ZWU-T.  Consider XIC-T also.

E.T.F.'s
Daniel Straus

Head of ETF Research & Strategy, National Bank Financ...

PricePrice
$13.890
Owned Owned
Unknown

WATCH

80% Canada / 20% US.  It is not a fixed income replacement.  He is not adding to his holding right now.  He loves it as a yield play and would add more if we sold off more aggressively.  He has half a position.

E.T.F.'s

80% Canada / 20% US.  It is not a fixed income replacement.  He is not adding to his holding right now.  He loves it as a yield play and would add more if we sold off more aggressively.  He has half a position.

E.T.F.'s
Larry Berman CFA, CMT, CTA

Chief Investment Officer, Partner, ETF Capital Manageme...

PricePrice
$14.150
Owned Owned
Yes

TOP PICK

Had been avoiding the utility area, because he saw the temper tantrum the market went through with the thought that rates were going up in the US. He’s come to the conclusion that interest rates are going to stay low for a lot longer than anticipated. Utility yields are quite attractive, and it is almost impossible to get those kinds of yields out of the fixed income market.

E.T.F.'s

Had been avoiding the utility area, because he saw the temper tantrum the market went through with the thought that rates were going up in the US. He’s come to the conclusion that interest rates are going to stay low for a lot longer than anticipated. Utility yields are quite attractive, and it is almost impossible to get those kinds of yields out of the fixed income market.

E.T.F.'s
David Cockfield

Managing Director, Northland Wealth Man...

PricePrice
$14.110
Owned Owned
Yes

DON'T BUY

He would be very cautious about certain ETF’s that are loaded with derivatives, etc. They may not perform the way you expect them to. Also, the market doesn’t just look at where rates are going in the next year. He would not be a big fan of a Covered Call ETF.

E.T.F.'s

He would be very cautious about certain ETF’s that are loaded with derivatives, etc. They may not perform the way you expect them to. Also, the market doesn’t just look at where rates are going in the next year. He would not be a big fan of a Covered Call ETF.

E.T.F.'s
Lorne Steinberg

President & Portfolio Manager, Lorne Steinberg Weal...

PricePrice
$14.100
Owned Owned
Unknown

BUY

Covered Call in 60% of shares.  It is in Utilities.  A pretty good yield.  He is pleased they expanded into US utilities.  Unfortunately they do badly in increasing interest rates.  He would not want to think rates were going up too fast.  Premiums for options are quite low right now so the covered call feature may not be doing as well as previously.

E.T.F.'s

Covered Call in 60% of shares.  It is in Utilities.  A pretty good yield.  He is pleased they expanded into US utilities.  Unfortunately they do badly in increasing interest rates.  He would not want to think rates were going up too fast.  Premiums for options are quite low right now so the covered call feature may not be doing as well as previously.

E.T.F.'s
John Hood

President & Portfolio Manager, J. C Hood Investment...

PricePrice
$14.100
Owned Owned
Yes

BUY

In a strong upward market it will underperform the equal weight without covered calls.  Despite what others have said, these are not bad for long term holds.  They do not, however, replace fixed income because you have equity exposure.

E.T.F.'s

In a strong upward market it will underperform the equal weight without covered calls.  Despite what others have said, these are not bad for long term holds.  They do not, however, replace fixed income because you have equity exposure.

E.T.F.'s
Larry Berman CFA, CMT, CTA

Chief Investment Officer, Partner, ETF Capital Manageme...

PricePrice
$14.180
Owned Owned
Unknown

COMMENT

They write call options against utilities.  It is an interest rate play.  Once rates started to go up, utilities are vulnerable and so are covered calls.  They may not go up for a while yet in Canada.

E.T.F.'s

They write call options against utilities.  It is an interest rate play.  Once rates started to go up, utilities are vulnerable and so are covered calls.  They may not go up for a while yet in Canada.

E.T.F.'s
Gavin Graham

Trustee, Pointbreak ETFs...

PricePrice
$14.180
Owned Owned
Unknown

COMMENT

What is the downside risk? This has 80% pipelines, telcos, utilities in Canada and 20% in the US. Generally utilities, telcos and pipelines are big dividend players. This is yielding about 7%, a very nice yield, but extremely interest rate sensitive. In 2013, when the US Federal Reserve was first talking about raising rates, we had the taper tantrum. This ETF went down pretty hard, but then came back up when the Fed backed off. In 2015, there was a big drop because of pipelines, when oil prices were coming down. You have to understand what you are holding.

E.T.F.'s

What is the downside risk? This has 80% pipelines, telcos, utilities in Canada and 20% in the US. Generally utilities, telcos and pipelines are big dividend players. This is yielding about 7%, a very nice yield, but extremely interest rate sensitive. In 2013, when the US Federal Reserve was first talking about raising rates, we had the taper tantrum. This ETF went down pretty hard, but then came back up when the Fed backed off. In 2015, there was a big drop because of pipelines, when oil prices were coming down. You have to understand what you are holding.

E.T.F.'s
Larry Berman CFA, CMT, CTA

Chief Investment Officer, Partner, ETF Capital Manageme...

PricePrice
$13.930
Owned Owned
Unknown

WAIT

Utilities, pipelines and Telco’s.  80/20 Canadian to US.  It fell on anticipation of interest rate increases and oil dropping early in 2016.  You have to be careful because rising interest rates and falling oil prices are both negative for it.

E.T.F.'s

Utilities, pipelines and Telco’s.  80/20 Canadian to US.  It fell on anticipation of interest rate increases and oil dropping early in 2016.  You have to be careful because rising interest rates and falling oil prices are both negative for it.

E.T.F.'s
Larry Berman CFA, CMT, CTA

Chief Investment Officer, Partner, ETF Capital Manageme...

PricePrice
$13.850
Owned Owned
Yes

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