Quick Summary
| ETF | Focus | Distribution | Diversification |
|---|---|---|---|
| ZWB | Canadian banks + covered calls | Monthly; varies with market & options income | Sector‑concentrated (banks) |
| ZWC | Broader Canadian high‑dividend + covered calls | Monthly; varies | More diversified (multiple sectors) |
Note: Distributions vary month‑to‑month. Confirm details with the issuer before investing.
Choose ZWB or ZWC in 30 Seconds
Pick ZWB if you want…
- Bank-only exposure (you specifically want Canadian banks).
- A tighter theme that tends to “move with the banks”.
- Monthly cash flow and you’re okay with payouts varying over time.
Best for: investors who like banks and want an income overlay.
Pick ZWC if you want…
- More diversification than just banks (still Canadian dividend stocks).
- A covered‑call approach with a wider sector mix.
- Monthly cash flow with potentially less single‑sector risk than ZWB.
Best for: investors who want income but prefer broader Canadian exposure.
Consider ZEB if you want…
- Canadian banks without covered calls (more upside participation).
- A simpler “banks beta” holding for long-term growth + dividends.
- Less income boosting, more total-return focus.
Best for: investors who believe in banks long-term and want fewer strategy layers.
Side-by-Side Comparison
| Feature | ZWB | ZWC | ZEB |
|---|---|---|---|
| Portfolio theme | Canadian banks + covered calls | Canadian high dividend stocks + covered calls | Canadian banks (equal weight), no covered calls |
| Diversification | Lower (single sector) | Higher (multiple sectors) | Lower (single sector) |
| Income profile | Monthly; can vary | Monthly; can vary | Typically lower; more traditional ETF dividends |
| Upside participation | Often capped vs banks (calls written) | Often capped vs holdings (calls written) | Higher upside participation (no calls) |
| Volatility feel | Can feel smoother than pure banks, but still banks‑driven | Often smoother vs pure equity portfolio, with broader mix | More “direct” bank exposure |
This is a simplified comparison for decision-making, not investment advice. Always check the fund pages for holdings, fees, and distribution details.
Common Scenarios (What People Actually Do)
1) “I want monthly income and I’m okay giving up some upside.”
If you like covered-call income, ZWB (banks-only) or ZWC (broader) can fit. Decide based on whether you want concentrated banks exposure or a wider set of dividend stocks.
2) “I want banks long-term — I don’t want to cap the upside.”
That’s where ZEB (no covered calls) can make sense — you keep more upside potential, and you still get bank dividends (but typically not as “income-boosted” as covered-call funds).
3) “I’m building a simple portfolio and don’t want to overthink it.”
Start with the exposure you actually want (banks vs broader dividend equities). Add a covered-call fund only if the income boost matters more to you than potential upside.
Pros & Cons (Honest Version)
ZWB - Pros
- Focused Canadian bank exposure + income overlay
- Monthly distributions
- Can feel smoother than pure banks during choppy markets
ZWB - Cons
- Single-sector concentration (banks)
- Covered calls can cap upside in strong rallies
- Distributions can change month to month
ZWC - Pros
- Broader diversification than ZWB
- Monthly distributions
- Covered-call income overlay across multiple sectors
ZWC - Cons
- Covered calls can cap upside in strong rallies
- Sector mix may drift over time (depending on index / rules)
- Distributions can change month to month
ZEB - Pros
- Pure bank exposure (no covered-call cap)
- Simple, transparent “banks beta” position
- Good for total-return investors who still want dividends
ZEB - Cons
- Single-sector concentration (banks)
- Less income “boost” than covered-call funds
- Can be more volatile during bank drawdowns
Next Step: Learn Covered Calls (Then Decide)
If you’re not sure how covered-call ETFs actually generate income (and what the trade-offs are), read this first:
What is a Covered‑Call ETF? Explained Simply →
Then come back and decide: banks-only (ZWB) vs broader dividend (ZWC) vs pure banks (ZEB).
When ZWB Can Make Sense
- You want targeted exposure to Canadian banks (income from dividends + options).
- You’re comfortable with bank sector concentration.
- You prefer a simple “one‑sector income” sleeve in a broader portfolio.
When ZWC Can Make Sense
- You want broader Canadian equity exposure with a covered‑call overlay.
- You value diversified sector exposure over a single industry bet.
- You’re seeking monthly income with a wider mix of holdings.
Risk & Return Considerations
- Covered Calls: Generate income but can cap upside in sharp rallies.
- Volatility: Income may be higher in volatile markets; payouts can fluctuate.
- Taxes: Distributions may include eligible dividends, capital gains, or ROC. Tax outcome varies by account type.