7 Best Canadian Bank ETFs

Here’s a list of 7 of the best Canadian bank ETFs you should consider adding to your portfolio:

1. BMO Equal Weight Banks Index ETF (ZEB)
2. iShares S&P/TSX Capped Financials Index ETF (XFN)
3. BMO Covered Call Canadian Banks ETF (ZWB)
4. RBC Quant Canadian Bank Leaders ETF (RBNK)
5. iShares Canadian Financial Monthly Income ETF (FIE)
6. Horizons Big Banks Index ETF (HBG)
7. First Asset Morningstar National Bank Quebec Index ETF (QXM)

1. BMO Equal Weight Banks Index ETF (ZEB)

The BMO Equal Weight Banks Index ETF (ZEB) aims to replicate the performance of the Solactive Equal Weight Canada Banks Index, net of expenses.

The Solactive Equal Weight Canada Banks Index comprises Canadian exchange-listed securities in the diversified bank industry, subject to minimum market capitalization and liquidity screens.

Each security in the Index is allocated equal weight rather than market capitalization weight.

ZEB offers growth solutions with exposure to Canadian bank stocks, equal weighting to lessen security-specific risk, and is managed by BMO Global Asset Management.

ZEB’s portfolio mainly consists of financial sector holdings, entirely from Canada, emphasizing its focus on Canadian banks. It’s eligible to be bought in your RRSP/RRIF/RESP/DPSP/TFSA.

ZEB has generally performed well since inception in October 2009.

2. iShares S&P/TSX Capped Financials Index ETF (XFN)

The iShares S&P/TSX Capped Financials Index ETF (XFN) is one of the go-to Canadian bank ETFs for investors.

It gives diversified exposure to financial service companies listed on the Toronto Stock Exchange.

This ETF has a variety of sectors, like banks, insurance companies, and other financial institutions.

With XFN, investors can get their hands on some of the top and most reliable Canadian banks, such as Royal Bank of Canada, Toronto-Dominion Bank, and Bank of Nova Scotia.

What makes this ETF different is its capped methodology.

The index it tracks has a maximum weight limit per constituent, which cuts down on concentration risk.

This means that no single company can control the performance of the ETF, presenting investors with a balanced look at the Canadian financial sector.

It’s noteworthy that XFN has produced steady returns over the years.

This makes it a great pick for long-term investors searching for stability and growth in the Canadian banking world.

3. BMO Covered Call Canadian Banks ETF (ZWB)

The BMO Covered Call Canadian Banks ETF (ZWB) is a top contender in the world of Canadian Bank ETFs.

It’s unique for its incorporation of covered call options on Canadian bank stocks.

This provides investors with extra income.

The ETF includes some of Canada’s biggest banks.

These are Royal Bank of Canada, Toronto-Dominion Bank, and Bank of Nova Scotia.

Selling these options brings in premiums to generate income.

The ETF has an edge in mitigating downside risk.

This is due to the covered call strategy.

It means investors can benefit from any upward movements of the underlying stocks.

For those seeking steady income and investing in Canadian banks, this ETF is a good option.

Its strategy sets it apart and provides the opportunity to increase returns.

4. RBC Quant Canadian Bank Leaders ETF (RBNK)

RBC Quant Canadian Bank Leaders ETF (RBNK) is a great investment option.

It focuses on top Canadian banks in the market.

Providing exposure to a range of Canadian bank stocks, it offers potential growth and stability.

Managed by RBC Global Asset Management Inc., it uses a quantitative investment approach.

This means analyzing data and using mathematical models to make decisions.

This helps achieve consistent returns over time.

This ETF includes both large and mid-cap Canadian bank stocks.

Mid-cap stocks give investors the chance to invest in growing banking companies.

This diversification usually reduces risk and helps better performance.

5. iShares Canadian Financial Monthly Income ETF (FIE)

The iShares Canadian Financial Monthly Income ETF (FIE) is a great option for investors seeking regular monthly income from the Canadian financial sector.

It has a diverse mix of stocks and bonds, with exposure to some of Canada’s largest banks and financial institutions.

The fund was created to provide monthly income by investing in dividend-paying stocks and fixed-income securities from financial companies in Canada.

It comes with a good dividend yield and offers investors access to banking, insurance, and asset management sectors.

As Canada’s financial sector continues to grow, this ETF provides an opportunity to join in on that growth.

It has outperformed its benchmark index over the years.

6. Horizons Big Banks Index ETF (HBG)

The Horizons Big Banks Index ETF (HBG) is a top Canadian bank exchange-traded fund.

This ETF offers exposure to a varied portfolio of shares in Canada’s leading banks.

Investing in HBG offers investors a chance to join the progress and performance of Canada’s huge banking sector.

It contains big Canadian banks like Royal Bank of Canada, Toronto-Dominion Bank, and Bank of Nova Scotia.

This ETF offers a simple way for investors to access these blue-chip financial institutions.

What makes the Horizons Big Banks Index ETF (HBG) special is its concentration on the major players in the Canadian banking industry.

By targeting companies that dominate this sector, it aims to capture their capacity for continuous growth and predictability.

7. First Asset Morningstar National Bank Quebec Index ETF (QXM)

QXM, the First Asset Morningstar National Bank Québec Index ETF, is a prominent Canadian bank ETF.

It exposes investors to the performance of the Morningstar National Bank Québec Index.

This index tracks the largest and most liquid financial institutions based in Quebec.

Investing in QXM gives investors a strategic option to diversify exposure to the Quebec banking sector.

It offers a basket of stocks from top financial institutions in Quebec.

This ETF focuses on one province only – Quebec.

This allows investors to tap into the potential growth and stability of the local banking industry, which may differ from other provinces in Canada.

What is Canadian Bank ETF?

Canadian Bank ETFs provide exposure to the banking sector in Canada and can offer long-term growth and stability.

They typically include some of the biggest and most established Canadian banks.

By purchasing shares in a Canadian Bank ETF, investors can spread their risk across multiple banks and benefit from diversification.

Furthermore, investing in Canadian Bank ETFs can provide individuals with regular dividend income.

Many Canadian banks have a history of paying out consistent dividends, and these payments are passed on to investors who own shares in the ETF.

This can be especially appealing for those who are income-focused and looking for stable cash flow.

Investing in Canadian Bank ETFs offers individuals a convenient option to gain exposure to the banking sector without having to research and invest in individual bank stocks.

Overall, Canadian Bank ETFs offer individuals many advantages, including exposure to the banking sector in Canada, diversification, and potential dividend income.

Before investing, however, it’s important to carefully review different options to choose the best Canadian Bank ETF that aligns with your investment goals and risk tolerance.

Key Considerations When Investing in Canadian Bank ETFs?

  • Evaluate the financial health and stability of the banks within the ETF. Look for banks with strong balance sheets and a steady record of profitability.
  • Understand which banks are included and their weightings.
  • Stay informed about factors like interest rates, economic conditions, and regulatory changes. These can impact the outlook for Canadian banks.
  • Compare fees across different options and pick an ETF with competitive fees. Higher fees can reduce returns over time.
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Frequently Asked Questions

  • What are Canadian Bank ETFs?
  • What are the benefits of investing in Canadian Bank ETFs?
  • How can I invest in Canadian Bank ETFs?
  • What are some popular Canadian Bank ETFs?
  • Are Canadian Bank ETFs suitable for all investors?
  • What are the fees associated with Canadian Bank ETFs?

 
DISCLAIMER: This is not investment advice. Recommendations are for educational purposes only, presented as a path for you to further research. Please seek independent financial advice before making any financial decisions. PiggyBank is not liable for any investment decisions you make based on the information presented on this website.