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

He likes this particular space except that it is hedged to the Cdn$, which he thinks it is not really going to be something that you want to do, given the fact that the US$ continues to move forward. He would prefer the individual names, or an ETF that is not hedged.

US Bank ETF or would an individual bank be better? You are better off to buy a diversified portfolio through an ETF. It gets rid of the risk of a single stock blowing up on you. He would suggest iShares US Financials (IYF-N) which are financials, not just banks. Another is iShares Dow Jones Regional Bank ETF (IAT-N). Or you could look at BMO Equal Weight US Banks Hedged to Cad (ZUB-T). He likes ZUB-T and is the way he would play this.

There is nothing wrong with buying US banks, but questions whether you want to hedge it back to the Cdn$ necessarily. Our dollar has been under pressure and probably will continue to be so for a while.

Thinks US banks, after 13-14 years of consolidating, are really attractive here. There is no doubt in his mind that he would want to be playing this. Although he thinks the US$ strengthens against the Cdn$, it feels like it is getting into the later innings. Hedging the Cdn$ is not a bad idea. This ETF is a great play on that.

Banks in the US are not a massive part of the economy. Equal weighted is not a bad way to manage the risk. It is not a bad place to be. People like the story of US banks and think it has a couple of years to go.

(A Top Pick Jan 30/15. Up .38%.) One of his cautionary notes on the market is that the US$ has run pretty hard. It has probably been a little overbought. He is just playing the sector for the next 2-3 months, and then he is out. The US banks tend to be in season and he thinks this will get to the top of its trading range, and maybe even break out by April or May, and then he will be gone.

He likes this. It gives you access to the US banks. The only concern he has had with US banking ETF’s, and why he has avoided them, is because of lawsuits. The number of lawsuits against the US banks has been huge, with monstrous fines being paid to regulators. That is not over yet.

(A Top Pick Dec 19/14. Down 10.7%.) He bought this because he has traded it before and knows its patterns very well. Had been absolutely sideways in 2014 and then started to break out. He tends to buy on breakouts. This should be strong through until April. Short-term traders could Buy it in here at around $18 mark and possibly sell it at around $22.

If you were going to buy banks, he would buy US banks. Prefers these from both the currency perspective and the fact that growth is a little bit stronger in the US than it is in Canada. He would prefer an ETF that focused on US regional banks, such as SPDR S&P Regional Banking (KRE-N). However, if you are going to be in a financial space, he would prefer to focus on a REIT ETF, like iShares Cohen & Steers Realty (ICF-N), or one of the investment management companies.

Hedged to the Canadian dollar. He switched to ZBK-T which is not hedged. He is positive on US banks because they are less expensive and because the regulators slapped them with such heavy fines. There will be more loan demand from improvements in housing.

From a seasonal perspective, you tend to get a bit of a pop from December to around April or so. Chart shows an uptrend through 2013 followed by a consolidation in 2014. It is now just starting to break out. He will play this for the next 4-5 months.

He likes it, but what he doesn’t like is the hedge against the Canadian dollar. He would rather have the US$ version of it, such as the SPDR Financial (XLF-N). Interest rates are eventually going to start moving up and the economy is getting a bit better, so this is the type of name you want to own longer-term, going out the next 2-3 years.

Has done very well and is up over 15% over the last year. Likes the US banks. There is more opportunity in this space going forward. This is trading at 1.4X versus Canadian banks that are trading at 1.8X.

From most of his readings, the US financial sector is still lagging on a five-year perspective, versus the other sectors. Probably represents some pretty good value.

This is the only choice for Canadians for financial exposure as the insurance companies are having a real problem getting return on equity.