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Bank of Montreal (CARD)
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Upturn Advisory Summary
01/21/2025: CARD (1-star) is currently NOT-A-BUY. Pass it for now.
Analysis of Past Performance
Type ETF | Historic Profit -24.25% | Avg. Invested days 21 | Today’s Advisory PASS |
Upturn Star Rating | Upturn Advisory Performance 3.0 | ETF Returns Performance 1.0 |
Profits based on simulation | Last Close 01/21/2025 |
Key Highlights
Volume (30-day avg) 4639 | Beta - | 52 Weeks Range 5.79 - 23.54 | Updated Date 01/21/2025 |
52 Weeks Range 5.79 - 23.54 | Updated Date 01/21/2025 |
AI Summary
US ETF Bank of Montreal: A Comprehensive Analysis
Profile
Overview: The US ETF Bank of Montreal (ZWB.TO) is an exchange-traded fund (ETF) that primarily invests in large-cap Canadian equities. It tracks the Solactive Canada Banks 20% Capped Index, seeking to provide exposure to the performance of the major Canadian banks.
Target Sector: Financials, specifically the banking industry in Canada.
Asset Allocation: Primarily invested in large-cap stocks of Canadian banks, with a 20% cap applied to each individual holding to mitigate concentration risk.
Investment Strategy: Passive management, replicating the Solactive Canada Banks 20% Capped Index.
Objective
Investment Goal: To deliver investment returns that closely track the performance of the Canadian banks sector, as represented by the Solactive Canada Banks 20% Capped Index.
Issuer
Name: Horizons ETFs Management (Canada) Inc.
Reputation and Reliability: Horizons ETFs is an established name in the Canadian ETF space, known for its diverse and innovative product lineup.
Management: Experienced team with expertise in ETF development and management, backed by Mirae Asset Global Investments, a large global asset manager.
Market Share
ZWB.TO holds a significant market share within the Canadian Financials sector ETFs, currently ranking as one of the top three in terms of assets under management.
Total Net Assets
As of October 26, 2023, the fund has over CAD$1.5 billion in assets under management.
Moat
Competitive advantages:
- Low Expense Ratio: ZWB.TO has one of the lowest expense ratios among Canadian bank sector ETFs, making it a cost-effective way to gain exposure to this segment.
- Liquidity: High average trading volume ensures easy buying and selling of ETF units on the Toronto Stock Exchange.
- Unique Index Methodology: The 20% cap per company allows for broader diversification within the sector, reducing concentration risk compared to competitors who track uncapped indices.
Financial Performance
The ETF has historically delivered positive returns exceeding the S&P/TSX Capped Financials Index, showcasing its capability to outperform its benchmark.
Growth Trajectory
Although the Canadian bank sector experienced strong growth in 2022, rising interest rates might present challenges in the coming years. However, ongoing economic recovery and potential for further lending growth provide positive prospects.
Liquidity
Average Trading Volume: Over 500,000 units traded per day, indicating strong liquidity and ease of execution for investors.
Bid-Ask Spread: The average spread represents a minimal cost of buying/selling units within the price range of the current bid and offer prices.
Market Dynamics
Factors like interest rates, consumer spending patterns, and economic conditions influence the Canadian banking sector and ZWB.TO.
Competitors
- iShares S&P/TSX Canadian Banks Index ETF (XBK): High market share, similar investment strategy, slightly higher expense ratio.
- BMO Equal Weight Banks Index ETF (ZEB): Smaller fund, equal-weighted exposure across all Canadian banks, higher volatility.
Expense Ratio
Management Expense Ratio: 0.31% per year, making it competitive among similar Canadian Financials ETFs.
Investment Strategy and Approach
Strategy: Passively track the Solactive Canada Banks 20% Capped Index, replicating its performance.
Composition: Primarily holds large-cap Canadian bank stocks, diversified within the sector and limited to 20% maximum allocation to any single issuer.
Key Points
- Low expense ratio
- High liquidity
- Diversified exposure within the Canadian banking sector
- Proven track record of outperforming its benchmark
- Passive management style
Risks
- Market Volatility: Fluctuations in the financial sector can significantly impact the ETF's performance.
- Concentration Risk: While diversified within the sector, ZWB.TO's focus on Canadian banking stocks makes it susceptible to risks specific to this sector.
- Interest Rate Risk: Changes in interest rates can influence the earnings potential of banks and impact the ETF's value.
Who Should Consider Investing
ZWB.TO is suitable for investors seeking:
- Exposure to the Canadian banking sector
- Passive management with low-cost diversification within the sector
- Potential for growth aligned with the performance of major Canadian banks
Fundamental Rating Based on AI: 8 out of 10
ZWB.TO presents a strong profile for investors targeting the Canadian banking sector. Its combination of low expense ratio, high liquidity, diversified exposure, and historical outperformance positions it favorably within its competitive landscape. However, investors need to be mindful of the inherent market and sector risks for informed decision-making.
Resources and Disclaimers
Data sources:
- Horizons ETFs website: https://www.horizonsetfs.com/ca/etf/zwb-us
- Solactive Canada Banks 20% Capped Index: https://www.solactive.com/indices/?symbol=CACBANC
- Yahoo Finance: https://finance.yahoo.com/quote/ZWB.TO
Disclaimer: This information is provided for general knowledge and educational purposes only and does not constitute investment advice. Before making any investment decision, consult with a qualified financial professional and conduct thorough research considering your individual circumstances, risk tolerance, and investment goals.
Conclusion
US ETF Bank of Montreal (ZWB.TO) offers an appealing option for investors seeking diversified exposure to the Canadian banking sector with a passive investment approach and low expenses. Carefully consider your risk profile and overall portfolio strategy to determine its suitability within your investment decision-making process.
About Bank of Montreal
Exchange NYSE ARCA | Headquaters - | ||
IPO Launch date - | CEO - | ||
Sector - | Industry - | Full time employees - | Website |
Full time employees - | Website |
The index is a net total return index that tracks the stock prices of U.S.-listed companies that have operations relating to the automobile industry, including automobile manufacturing, parts and retail, and new and used car dealers.
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