In this post, we will discuss one of the most popular Canadian Bank ETFs: ZEB BMO Equal Weight Banks Index. We will review ZEB’s historical performance and compare to similar ETFs in the market.
ZEB: Investment objective
The BMO Equal Weight Banks ETF has been designed to replicate, to the extent possible, the performance of the Solactive Equal Weight Canada Banks Index, net of expenses. The index includes the major Canadian banks with a balanced allocation as you can see in the composition of the portfolio below.
Updated daily – ZEB ETF
Banking sector perspectives 2023
Canadian banks are grappling with challenges like slower loan growth, shrinking net interest margins, increased provisions for credit losses, and higher capital requirements, as evident from recent quarterly earnings. The potential of a recession adds to concerns, with Provisions for Credit Losses (PCLs) expected to rise, further impacting sector earnings.
Despite these hurdles, the strategic phase of reserve building during a recession can be an opportune time to invest in banks, leveraging depressed valuations.
Amid challenges in the Canadian banking sector, the ZEB ETF stands out as an optimal, cost-effective means for exposure. With a blend of low costs and robust diversification, it presents a favorable opportunity to navigate the complexities of the market and capitalize on potential upsides in the Canadian banking industry, in my opinion.
Given the myriad challenges facing Canadian banks, the ZEB ETF emerges as a strategic choice for exposure to the sector. The ETF’s low-cost structure and extensive diversification make it an attractive investment vehicle, particularly amidst the current uncertainties. With the banking industry grappling with issues such as slower loan growth and increased provisions for credit losses, the ZEB ETF provides a well-rounded approach to navigate these challenges. Its portfolio composition can mitigate risks associated with individual bank performance, offering investors a more stable and diversified position.
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ZEB ETF review: AUM, MER and Dividend yield comparison
AUM in M | MER % | Div Yld | |
FIE – Ishares CDN Fin Mthly Income | 978 | 0.89 | 5.85 |
ZEB -BMO S&P TSX Equal Weight Banks Indx | 2,800 | 0.28 | 3.08 |
ZWB –BMO Covered Call Canadian Banks | 2,700 | 0.72 | 5.37 |
XFN –iShares S&P/TSX Capped Financials Index | 1,900 | 0.61 | 2.66 |
ZEB ETF review: Performance comparison
Based solely on historical performance, ZEB -BMO S&P TSX Equal Weight Banks Index had one of the best performance in the past 5 years. In addition, the fund pays around a 3% dividend yield. The management expense ratio is at 0.28%, which is one of the lowest among our list.
For income seekers, FIE Ishares CDN Fin Mthly Income offers an attractive dividend yield above 5%.
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ZEB Morningstar rating
ZEB Holdings
Weight (%) | Name |
17,18% | BANK OF MONTREAL |
16,90% | TORONTO-DOMINION BANK/THE |
16,78% | CANADIAN IMPERIAL BANK OF COMMERCE |
16,59% | NATIONAL BANK OF CANADA |
16,50% | ROYAL BANK OF CANADA |
15,86% | BANK OF NOVA SCOTIA/THE |
0,19% | CASH |
Please consult issuers’ website for up-to-date data
ZEB dividends
Ex-Div Date | Pay Date | Amount |
---|---|---|
4/26/2023 | 5/2/2023 | 0.1400 |
3/29/2023 | 4/4/2023 | 0.1400 |
2/24/2023 | 3/2/2023 | 0.1400 |
1/27/2023 | 2/2/2023 | 0.1400 |