BMO EQL WGT US BANK HDGD TO CAD IDX ETF (ZUB.TO)

Equal weight US Banks. It is a way to play the sector. It is currency hedged. It is a short term play.

He was keen on US banks for a number of months already. He prefers this over many US listed bank ETFs because it is equal weight. There are US ETFs that focus on US regional banks also. 1.3% yield.

It expresses his conviction for the US banks and it is currency hedged. Over the next 3 to 5 years the US $ is probably over done compared to other currencies. There will be great growth in this sector.

This has banks from across the US. The story is a good one with regards to financials globally, and especially North America. He is not a sector guy, but if he were, finances would be a sector he would be in right now.

Prefers the BMO Equal Weight US Banks (ZBK-T), which is not hedged. He is not overly optimistic on the Cdn$. Expects the range will be $.70-$.75. However, if you own this, that is fine.

This gets you hedged back to the Cdn$, so you are taking currency off the table. If you thought the Cdn$ was going higher, you want the hedge. If you think the Cdn$ is going significantly lower, you would probably want an unhedged position.

It is a good ETF to play the US banks. There are a few others. If you look at the banking sector in the US it has been a good place to get into now. Post-financial periods take a long time to work through the financial system. Canadian banks are an uninteresting place to invest. All the macro tail winds are now turning to head winds for the banks. He would avoid Canadian Banks.

This is about 60% US regional banks. There are 2 issues with US banks, especially the bigger ones. They have been sharply curtailed after the financial crisis, and can’t do a lot of the trading that they used to do. Also, they have had to pay huge fines. The fines seem to have finally worked its way through the system.

The banks have been beaten up, and have now been cleaned. They’ve gone into every corner of their balance sheet to rectify the situation. They have capital return strategies. Technically speaking, the charts are looking interesting. A single Fed rate hike will not send this flying up into the air, but what will work is the steepening of the yield curve, which is what we are all waiting for. He would be interested in this name, and would suggest a 3^rd now, another position after the election, followed by another 3^rd after a Fed rate hike.

Hedged US bank ETF. You had to wait to get into this sector until the litigation feast was over. The US banks have lagged the industry.

Or ZBK-T. If you want to be in the banks this is probably a good place to be. But he feels US banks will underperform for a long period of time. He does not like the sector.

Loves the big US banks, and owns the unhedged one. He likes that this is equally weighted. About half of this is money centred banks with the other half being super regionals.

Currency Hedged. The markets may have bottomed last week. He bought some last week. He thinks the valuation will run into trouble when it hits the lowering trend line of recent highs.

Hedged or unhedged? Sometime, in the not too distant future, you will be wise to go to hedged. We are pretty close to a bottom, and as a result, it is probably wise to consider buying these things in the hedged version.

He likes the US banks, but doesn’t want it to be currency hedged.