BMO Europe High Dividend Covered Call Hedged to CAD ET | StockChase
60
BMO Europe High Dividend Covered Call Hedged to CAD ET (ZWE-T)

Last Price Recorded: $21.9500 on 2018-05-19

ON STOCKCHASE SINCE Sep 2015

E.T.F.'s
60
BMO Europe High Dividend Covered Call Hedged to CAD ET (ZWE-T)

Last Price Recorded: $21.9500 on 2018-05-19

ON STOCKCHASE SINCE Sep 2015

E.T.F.'s

BMO Europe High Dividend Covered Call Hedged to CAD ET


Signal Opinion Expert
HOLD

It is his favourite way to play Europe.  It is yielding 6%.  It holds the highest quality dividend paying companies.  He may reconsider it in 6 months.

E.T.F.'s

It is his favourite way to play Europe.  It is yielding 6%.  It holds the highest quality dividend paying companies.  He may reconsider it in 6 months.

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

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

PricePrice
$21.680
Owned Owned
Yes

BUY

High dividend covered call strategy.  It is his favorite way to play Europe right now.  It is diversified across sectors.  For the next couple of years there will not be a lot of upside on these stocks, and then we are due for an equity market correction.  It is the best way to hold Europe for now.

E.T.F.'s

High dividend covered call strategy.  It is his favorite way to play Europe right now.  It is diversified across sectors.  For the next couple of years there will not be a lot of upside on these stocks, and then we are due for an equity market correction.  It is the best way to hold Europe for now.

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

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

PricePrice
$21.500
Owned Owned
Yes

COMMENT

Return of Capital – Good or Bad.  If you get your own money back they can boost the yield and distribution.  As new people come into the fund, they want to keep the distribution the same for everyone.  This latter kind is not a bad return of capital.

E.T.F.'s

Return of Capital – Good or Bad.  If you get your own money back they can boost the yield and distribution.  As new people come into the fund, they want to keep the distribution the same for everyone.  This latter kind is not a bad return of capital.

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

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

PricePrice
$21.500
Owned Owned
Unknown

BUY

XAW-T vs. XEF-T.  XAW-T is an all world ETF with broader exposure.  His favourite way to play international is good quality, high dividend paying stocks in Europe with a covered call overlay.  ZWE-T is his choice.

E.T.F.'s

XAW-T vs. XEF-T.  XAW-T is an all world ETF with broader exposure.  His favourite way to play international is good quality, high dividend paying stocks in Europe with a covered call overlay.  ZWE-T is his choice.

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

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

PricePrice
$21.050
Owned Owned
Yes

DON'T BUY

He likes Europe, though earnings momentum is starting to flatten compared to the U.S. Here, you own high-dividend stocks in Europe, then put a covered call and pick up some more income while it's hedged to CAD. Because has risen against CAD, you're better off owning an un-hedged version of this strategy. It's better to own the underlying security instead of a covered call like this to earn a better return. Best to own a covered call in a flat or sideways market.

E.T.F.'s

He likes Europe, though earnings momentum is starting to flatten compared to the U.S. Here, you own high-dividend stocks in Europe, then put a covered call and pick up some more income while it's hedged to CAD. Because has risen against CAD, you're better off owning an un-hedged version of this strategy. It's better to own the underlying security instead of a covered call like this to earn a better return. Best to own a covered call in a flat or sideways market.

E.T.F.'s
Stan Wong

Director & Portfolio Manager, Private Wealth Manag...

PricePrice
$21.000
Owned Owned
No

BUY on WEAKNESS

His favourite way to play Europe.  France, Germany and The UK are the highest holdings.  It still gives you the yield even though the price has dropped off.  He would like to buy more if it drops another 10%.

E.T.F.'s

His favourite way to play Europe.  France, Germany and The UK are the highest holdings.  It still gives you the yield even though the price has dropped off.  He would like to buy more if it drops another 10%.

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

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

PricePrice
$20.920
Owned Owned
Yes

BUY

You get 6-7% return.  It holds European dividend stocks with a covered call strategy.  The risk is market risk but you can feel fairly safe with this one.  He bought last week during the weakness.

E.T.F.'s

You get 6-7% return.  It holds European dividend stocks with a covered call strategy.  The risk is market risk but you can feel fairly safe with this one.  He bought last week during the weakness.

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

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

PricePrice
$20.910
Owned Owned
Yes

PAST TOP PICK

(A Top Pick June 30/17 -  Down 5.2%.)  A way to enter Europe with a good yield (6 or 7%). He has been in and out of Europe several times. Always disappointed with the returns. Good ETF. 

E.T.F.'s

(A Top Pick June 30/17 -  Down 5.2%.)  A way to enter Europe with a good yield (6 or 7%). He has been in and out of Europe several times. Always disappointed with the returns. Good ETF. 

E.T.F.'s
John Hood

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

PricePrice
$20.780
Owned Owned
No

PAST TOP PICK

(A Top Pick May 11/17. Up 4%.) This one has a very high yield. If you want to play Europe in a conservative way, this is a way to go.

E.T.F.'s

(A Top Pick May 11/17. Up 4%.) This one has a very high yield. If you want to play Europe in a conservative way, this is a way to go.

E.T.F.'s
John Hood

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

PricePrice
$22.440
Owned Owned
Yes

PAST TOP PICK

(A Top Pick June 30/17. Up 3%.)  One of the main attraction is the covered call. It’s an income generating ETF. It’s Europe so you get the dividend as income and covered calls are capital gains. They don’t do full 100% coverage on the underlying assets, they do 50-60% depending upon what they see the market doing.

E.T.F.'s

(A Top Pick June 30/17. Up 3%.)  One of the main attraction is the covered call. It’s an income generating ETF. It’s Europe so you get the dividend as income and covered calls are capital gains. They don’t do full 100% coverage on the underlying assets, they do 50-60% depending upon what they see the market doing.

E.T.F.'s
John Hood

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

PricePrice
$21.940
Owned Owned
Yes

COMMENT

A Covered Call ETF on European stocks. The European stock market has underperformed Canada relative to the US since the financial crisis. There is potential upside if you believe they are getting their act together. Most of these ETF's tend to sell Call options against half the portfolio. The challenge is the same as you would have with any ETF that has a broad base of securities in it, because you are looking at securities from various industries. The ones going up are going to be capped and pulled out, and the ones going down the options are going to expire worthless, but you are going to end up writing options on half of those with a lower strike price, which means they can never get back to where they where. You have to be aware of these issues when dealing with a broad-based portfolio and the downside of covered calls.

E.T.F.'s

A Covered Call ETF on European stocks. The European stock market has underperformed Canada relative to the US since the financial crisis. There is potential upside if you believe they are getting their act together. Most of these ETF's tend to sell Call options against half the portfolio. The challenge is the same as you would have with any ETF that has a broad base of securities in it, because you are looking at securities from various industries. The ones going up are going to be capped and pulled out, and the ones going down the options are going to expire worthless, but you are going to end up writing options on half of those with a lower strike price, which means they can never get back to where they where. You have to be aware of these issues when dealing with a broad-based portfolio and the downside of covered calls.

E.T.F.'s
Richard Croft

President, R.N. Croft Financial...

PricePrice
$22.130
Owned Owned
Unknown

PAST TOP PICK

(A Top Pick May 11/17. Up 0%.) He likes their exposure to Europe, and it has a Covered Call overlay. The yield is close to 5%-6%. The only trouble with Europe is that it is a political morass, so he could pull the trigger on this holding at any time.

E.T.F.'s

(A Top Pick May 11/17. Up 0%.) He likes their exposure to Europe, and it has a Covered Call overlay. The yield is close to 5%-6%. The only trouble with Europe is that it is a political morass, so he could pull the trigger on this holding at any time.

E.T.F.'s
John Hood

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

PricePrice
$21.920
Owned Owned
Yes

BUY

Europe, high dividends, CAD$ hedged.  Don’t look for another 22% return, however.  He gets some downside protection and a yield of about 5%.

E.T.F.'s

Europe, high dividends, CAD$ hedged.  Don’t look for another 22% return, however.  He gets some downside protection and a yield of about 5%.

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

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

PricePrice
$22.390
Owned Owned
_N/A

COMMENT

EUFN-N vs. ZWE-T.  EUFN-N is an interesting way to get exposure to European banks.  The risk is that the European recovery does not take hold.  It appears the world is recovering and that the banks are a good place to be, although his outlook longer term is not great on them, and so he does not recommend it.  He sees more risk than not.  Otherwise, it is a good way to play European banks.  He prefers ZWE-T for the yield and the covered calls to lower risk.

E.T.F.'s

EUFN-N vs. ZWE-T.  EUFN-N is an interesting way to get exposure to European banks.  The risk is that the European recovery does not take hold.  It appears the world is recovering and that the banks are a good place to be, although his outlook longer term is not great on them, and so he does not recommend it.  He sees more risk than not.  Otherwise, it is a good way to play European banks.  He prefers ZWE-T for the yield and the covered calls to lower risk.

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

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

PricePrice
$22.230
Owned Owned
Yes

COMMENT

ZWE-T vs. ZPH-T.  ZPH-T is the put write strategy.  If we have an acute sell off, both will lose a little money.  If you are branching outside of Canada, there is no dividend tax credit, but put write gives additional income.  He recommends having a bit of both in order to diversify.  Europe is a bit more attractive over the next couple of years.

E.T.F.'s

ZWE-T vs. ZPH-T.  ZPH-T is the put write strategy.  If we have an acute sell off, both will lose a little money.  If you are branching outside of Canada, there is no dividend tax credit, but put write gives additional income.  He recommends having a bit of both in order to diversify.  Europe is a bit more attractive over the next couple of years.

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

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

PricePrice
$22.140
Owned Owned
Unknown

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2 Comments

GerryT1

October 26th 2015 at 7:25pm

Interesting potential opportunity but I wonder:
1 - Are they writing covered calls on a large percentage of the companies in the ETF.
2 - Do they use leverage or not.
3 - Does the monthly distribution include a large percent of "Return Of Capital"

Hans Albrecht

August 26th 2016 at 4:19pm

Horizons Enhanced Income International Equity covered call ETF (HEJ) to July 31 is up 5.2% versus 0.70% for ZWE, with volatility of 15.9% versus 17.8% for ZWE. And with a better div yield of 8.3% versus 6.6%. But it is more 'worldy' than just Europe, with exposure to S.America and Asia as well as Europe.
Full disclosure: I work for Horizons


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