Quick Summary
| ETF | What It Holds | Covered Calls? | Distributions | Diversification |
|---|---|---|---|---|
| ZWB | Canadian big banks only (TD, RBC, BMO, Scotiabank, CIBC, National Bank) | Yes (~50% of portfolio) | Monthly; varies | Low — single sector (banks) |
| ZWC | Broader Canadian high-dividend stocks across multiple sectors | Yes | Monthly; varies | Medium — multi-sector |
| ZEB | Canadian big banks only (equal-weighted, no calls) | No | Quarterly typical | Low — single sector (banks) |
Distributions vary month to month. Confirm all figures with BMO or your brokerage before investing.
Side-by-Side Comparison
| Feature | ZWB | ZWC | ZEB |
|---|---|---|---|
| Full name | BMO Covered Call Canadian Banks ETF | BMO Covered Call Canadian High Dividend ETF | BMO Equal Weight Banks Index ETF |
| Holdings | Canada's 6 major banks | Broader Canadian dividend-paying stocks (financials, energy, utilities, telecoms, etc.) | Canada's 6 major banks, equal weighted |
| Covered calls? | Yes — on ~50% of portfolio | Yes | No |
| Distribution frequency | Monthly | Monthly | Quarterly (typically) |
| Approx. yield (2026) | ~6–7% | ~6–7% | ~4–5% |
| Upside participation | Partially capped by covered calls | Partially capped by covered calls | Full upside (no calls written) |
| MER (approx.) | ~0.72% | ~0.72% | ~0.28% |
| Sector concentration risk | High (banks only) | Lower (multiple sectors) | High (banks only) |
| Best for | Income-focused bank believers | Income-focused investors wanting diversification | Growth-oriented bank investors |
Approximate figures based on 2025–2026 data. Always verify MER and yield with official fund documents.
How to Choose — The 30-Second Version
The single most important question: Do you want bank-only concentration or broader diversification? If banks specifically, then ZWB vs ZEB is the next decision (income vs growth). If you want more sectors, ZWC is the answer.
What About ZEB? (The Non-Covered-Call Option)
ZEB holds the exact same Canadian banks as ZWB — TD, RBC, BMO, Scotiabank, CIBC, National Bank — but without writing any covered calls. This has meaningful implications:
- More upside: In a strong bank rally, ZEB participates fully. ZWB may miss significant gains above the call strike prices.
- Less income: ZEB pays traditional quarterly dividends — typically a lower yield than ZWB's call-boosted monthly distributions.
- Lower fees: ZEB's MER (~0.28%) is significantly cheaper than ZWB's (~0.72%). Over 10–20 years, this compounds meaningfully.
- Quarterly, not monthly: ZEB doesn't suit investors who need monthly cash flow.
Think of it this way: ZWB is ZEB with an income turbocharger that also limits the speed. If you need the cash flow now, ZWB makes sense. If you're building wealth over the long term, ZEB's lower fees and uncapped upside are worth considering.
Real-World Scenarios
Scenario 1: Retired investor drawing income from a TFSA
ZWB or ZWC can work well here. Monthly distributions are tax-free inside a TFSA. The priority is predictable cash flow, not maximum growth. ZWB offers bank-specific concentration; ZWC offers broader diversification. Either suits if the goal is monthly income.
Scenario 2: 45-year-old building a portfolio for retirement in 20 years
This investor has time on their side and doesn't need income now. ZEB might suit better — lower fees, full upside participation, and bank dividends reinvested over 20 years can compound significantly. The upside cap of ZWB/ZWC would cost real money over that timeframe.
Scenario 3: Investor who wants broad Canadian dividend exposure
ZWC fits here. Rather than bank-only concentration, ZWC spreads across Canadian financials, energy, utilities, and telecoms — all sectors known for dividends — with a covered-call overlay. More diversification, similar monthly income profile to ZWB.
Scenario 4: Investor who loves Canadian banks and wants maximum income
ZWB is the natural fit. Bank concentration plus the covered-call income boost. Comfortable accepting the upside cap in exchange for higher monthly distributions.
Pros and Cons of Each
ZWB
Pros:
- Monthly distributions — income-focused
- Targeted Canadian bank exposure
- Covered calls add income beyond bank dividends alone
- Can feel smoother than pure bank equity in choppy markets
Cons:
- Single-sector concentration (banking sector risk)
- Covered calls cap upside in strong rallies
- Higher MER than ZEB (~0.72% vs ~0.28%)
- Distributions fluctuate month to month
ZWC
Pros:
- Monthly distributions — income-focused
- Broader sector diversification than ZWB
- Covered-call income across multiple sectors
- Less single-sector concentration risk
Cons:
- Covered calls still cap upside in strong markets
- Higher MER than a plain diversified dividend ETF
- Distributions fluctuate month to month
- Holdings mix can shift as sector weights change
ZEB
Pros:
- Full upside participation (no covered call cap)
- Lower MER (~0.28%) — cheaper to hold long-term
- Equal-weighted bank exposure — less top-heavy
- Pure, transparent bank equity exposure
Cons:
- Quarterly distributions — not monthly
- Lower income yield than ZWB/ZWC
- Same single-sector bank concentration risk
- More volatile during banking sector downturns
Frequently Asked Questions
Is ZWB or ZWC a better long-term investment?
Neither is universally superior. Over periods when bank stocks outperform, ZEB will likely beat both ZWB and ZWC on total return. ZWB and ZWC excel when you specifically need monthly income and are willing to sacrifice some upside for it. Long-term total return depends heavily on market conditions.
Can I hold both ZWB and ZWC in the same portfolio?
Yes, some investors hold both to get Canadian bank concentration (ZWB) alongside broader Canadian dividend exposure (ZWC). However, there's overlap in the financial sector. Make sure you understand what you own and aren't doubling up on risk you didn't intend.
Which is better in a TFSA — ZWB or ZWC?
Both work well in a TFSA since distributions are tax-free. The choice comes down to your preference for bank concentration (ZWB) vs broader diversification (ZWC), not tax considerations.
How often do ZWB and ZWC change their distributions?
Distributions can change month to month based on option premium income and dividends received from holdings. ZWB has been relatively consistent at $0.11–$0.12/unit per month in 2025–2026, but this is not guaranteed to continue.
Where can I see the current holdings of ZWB and ZWC?
BMO publishes current holdings on their official ETF pages. Search "BMO ZWB ETF" or "BMO ZWC ETF" to find the fund pages with up-to-date holdings, distributions, and MER information.