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Opinions Daniel Straus
BMO Europe High Dividend Covered Call Hedged to CAD ETZWE.TOCOMMENTMay 26, 2016
Daniel StrausStock price when the opinion was issued
As of Jun 19, 2026. Market Open.
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Likes exposure to Europe, of which many Canadians have minimal exposure. ZWE looks at the dividend yields of its holdings. Plus, it does some covered writing, which gives you income along the way in tradeoff for upside. Attractive yield, but consider also owning some European stocks on their own. Nice piece of diversification for your portfolio, good bit of income.
In general, Europe is good value compared to US or NA markets. Lower PE and book value, higher dividend. This one has high dividend stocks, with covered call overlay. Up 11% YTD. Makes sense for cashflow. But ZWP, holding underlying securities, gives better total return. Yield is around 7.5%.
BMO Europe High Dividend Covered Call Hedged (ZWE-T) or Vanguard FTSE Developed Europe Index (VE-T)? Both well-designed but very different in the kind of return profile they give. This one holds a stock portfolio, and writes Calls. If there is a strong Bull market and the stocks are called away, you won’t participate fully in the upside. The covered call is actively managed, so if strike prices are a little out of the money, they end up delivering a very high income stream, but you are selling a little bit of the upside. If European equity markets rally very strongly, this will not offer you the same type of participation as (VE-T).