BMO MSCI Europe High Quality (ZEQ-T)

A good way to play Europe's big 50 stocks. But he's only lost money in Europe because of their politics and staunch unions.

(A Top Pick Sept 28/17, Up 5%) Not an “if” thesis, it’s a “when” thesis. Core holding. Good place to park capital. Trading 13.5x 2019, with similar EPS growth rates. Poor performance is tariff related. Will do well for you if you’re patient.

(A Top Pick May 18/17 - Up 4%) He is cooler on this one now. They are more Emerging Market than Europe now.

This ETF uses MSCI’s quality screening method to select holdings. These have higher ROE and lower financial leverage. It can therefore take some time for the value to emerge compared to outright market indices. He likes it because it is liquid and attractively priced – although there may be cheaper ETFs out there (XEH-T for example). The offset is that the holdings have relatively high PE ratios due to the quality of the holdings. He would recommend ZDM-T as it offers a higher level of diversification into Asia as well.

There are people concerned about Trump, NAFTA, real estate, etc. and have withdrawn form the market and are sitting on cash. He has come up with suggestions that are relatively safe and represent a broad diversification in relatively safe areas. This represents participation in high quality securities in the European market. One concern he had is that a good chunk of this portfolio is in the UK, and BREXIT has been a problem. Has come to the conclusion that BREXIT probably won’t happen. If so, this ETF will do quite well.

The time to own Europe is now. It’s a pretty easy trade. This trades at about 14X in the next 12 months, versus the TSX at around 16X and the S&P at around 18X. He likes that this has a strong allocation to the consumer, both discretionary and staples and that it is hedged. Pays a 2% dividend yield. There is no withholding tax, as the ETF holds the shares.

(A Top Pick Aug 12/16. Up 8%.) This has done all right, but it did better in the past. There is some concern right now in that it has a fair amount of UK content. BREXIT has confused the picture. He is now looking at other European ETF’s.

An ETF that focuses on Europe, for a long-term hold? This is one of his favourites in terms of Europe. It has a number of the big European companies. This has a very high-quality portfolio. His only caveat is that it has a number of UK stocks, but feels the BREXIT concerns are probably overdone, and the UK is going to back into some kind of a deal so that BREXIT really isn’t going to happen.

(A Top Pick April 14/16. Up 18.87%.) The main objective in getting into Europe is that the numbers there look a lot better. The main holdings of this ETF are in the UK, Germany and Switzerland. A high-quality portfolio.

The situation in Europe has definitely improved with the French election. Merkel is up 85%. Things seem to be settling down.

BMO Europe High Dividend Covered Call hedged to CAD (ZWE-T) or BMO MSCI Europe High Quality (ZEQ-T)? ZWE is basically a value screen, or alternatively you can for a quality that is similar, but not exactly the same through this one. Either way, you are looking at factor investing. He doesn’t find a lot to choose between the 2. Either would do well for you.

The UK is in there as well. It screens for defensive companies. He is not crazy about the Canadian dollar hedge. He prefers to go into individual countries.

(A Top Pick Oct 23/15. Down 1.64%.) This is supposed to be the European Index, but really looking at the individual securities, it is very much England, Switzerland and Germany. The BREXIT thing came along and that threw a real curve. He is letting this sit for the moment as he thinks there is still some potential.