Buy Royal (RY) or a CDN Bank ETF of All banks(ZEB) , or a Covered Call ETF of all Banks (ZWB.TO)

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1. Why bet on one Canadian bank, why not bet on all of them? And if you like 5% dividend, would you not like 6.56% better? What are your thoughts on ZWB.TO? I bought this back in April as I could not decide which of the banks was going to bounce back faster. Turns out all of them (ZWB) out performed any one of them 🙂

2. Do you think I should continue to hold ZWB or sell it, and just buy RY.TO?

3. By the way, you do a great job on these videos, but I wish you would do video to accompany your Premium Reports. They are rich in information but could use a good video explanation! Thanks for your hard work on on the Canadian market.

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Asked on November 22, 2020 12:49 pm
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Private answer

Hey there!

ZWB is a fine option. ZEB I don't like, mostly because you just lose yield compared to buying positions in all 6 of the holdings, and you pay a management fee.

ZWB however with the covered call addition is a great option for those who just want a play on all banks, and the added distribution of covered calls. However be aware that this distribution may vary, depending on how much money the managers make with covered calls. And the use of derivatives also poses more risk, so the fund is riskier than just owning all 6 banks.

But, covered calls are one of the safer options strategies. The real risk for the fund would be if they sold a call option on a bank at say.... $55 and the stock rose to $60 once financials start recovering more. The fund would be forced to sell some of their stock at a discount to its share price. But, they still retain the option premium.

But, I know plenty of people who own ZWB, and it's a fine play.

In terms of the videos, we don't do videos here at Premium just because of our constant updates. We'd be producing 20+ videos a quarter, and ALL those videos would come during a 2-3 week span when earnings are reported. If we simply highlighted a stock and never updated our outlook on it, videos would be fine. But to produce over 100 videos a year is insanely labor intensive. However, it's possible we could bring videos to Premium on other types of content.

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Posted by Dan Kent
Answered on November 22, 2020 1:53 pm