One of the sectors that remains under pressure following last year’s pandemic-related selloff happens to be financials. All banks have recovered from last year’s lows, though many remain below the levels they saw prior to the pandemic.
Many value investors may be looking for a passive option to invest in this sector in a diversified way. One such exchange traded fund (ETF) I think provides excellent coverage and diversification in this sector is the BMO Equal Weight Banks Index ETF (TSX:ZEB).
This ETF tracks the broad banking sector, and provides investors with excellent exposure to Canadian banks. These banks have performed well of late as net interest margins have improved and provisions for credit losses have been removed and are now hitting the banks’ bottom lines.
I think these trends are likely to continue, and I see the pandemic-related worries many investors had last year as being short term in nature.
Accordingly, I think investors eager to earn some very healthy dividend income ought to consider this ETF today. The management expense ratio on this ETF is low, and the ETF itself is well-managed.
I also like the fact that this ETF is equal-weighted, providing more exposure to investors to the higher growth (but higher volatility) smaller banks in addition to the big names so many investors may already own such as Royal Bank of Canada (TSX:RY)(NYSE:RY) or Toronto-Dominion Bank (TSX:TD)(NYSE:TD).
This is an ETF I’d recommend income and long-term investors seeking total return consider today.
Invest wisely, my friends.