ZWB.TO DRIP & Distribution Calculator

What is ZWB.TO?

BMO Covered Call Canadian Banks ETF, launched January 28, 2011.

ZWB.TO — BMO Covered Call Canadian Banks ETF

This is a growth-and-income blend — a real chunk of its long-run return has come from price growth, not just the yield. Backing it out: BMO's own 10-year annualized return is 11.6%, and the current yield is roughly 5%, which suggests something in the range of 6-6.5% a year has come from the underlying price appreciation of the banks themselves. That's actually a meaningful growth component for a covered-call fund — more than you'd guess from the yield alone.

Unlike the broader covered-call funds already covered here, ZWB isn't diversified across sectors at all — it's a pure bet on Canada's six big banks (Royal, TD, Scotiabank, CIBC, BMO, and National Bank), each held in roughly equal size, with covered calls written on about half the portfolio to generate extra monthly cash on top of what the banks already pay in regular dividends. Structurally it's a fund-of-a-fund — it holds BMO's own equal-weight bank index fund underneath and layers the option-writing strategy on top of that.

On fees: the MER is 0.72%, in line with BMO's other covered-call funds — a real cost, not the cheapest way to get bank exposure.

It pays monthly, currently around $0.12-0.15/unit, working out to a yield in roughly the high-4% to mid-5% range depending on the source (yields have moved around a fair bit as the distribution itself has changed month to month). Performance has been very strong lately — up nearly 35% in 2025 alone — but worth being upfront that this reflects an unusually good run for Canadian banks specifically, and the same capped-upside trade-off applies here as with any covered-call strategy: in a sharp rally, the calls sold against the portfolio limit how much of that run gets captured. Its own official numbers also show it isn't immune to bad stretches — down in 2 of the last 10 calendar years, and its worst 3-month period (ending April 2020) would have taken a $1,000 investment to $780.

Official fund page →

Not sure how a fund like this generates its payout? See Covered-Call ETFs Explained.

Risk: Medium risk

What's the actual risk rating?

BMO's own ETF Facts document rates ZWB "Medium" risk. Analyst sentiment on Stockchase is more mixed than most of the funds covered so far — 4 buy, 1 hold, 1 sell over the past year, with a "weak buy" as the most recent call. The specific caution raised repeatedly isn't about the covered-call mechanics, it's concentration: this fund is 100% Canadian banks, with no other sector to fall back on if that one group has a rough stretch, and some analysts have specifically noted it lagged a plain uncapped version of the same six banks over the past year — the direct cost of the capped-upside trade. A few also flagged that, given how far banks have already run, this isn't necessarily the best entry point for new money right now, even while still calling it a reasonable long-term income holding.

Plain-English bottom line: The "Medium" rating covers volatility — but the real thing to know going in is concentration. This is a single-sector bet on Canadian banks, and the extra income comes at the cost of giving up some of the upside when that sector does well.

Price trend: Growing

A high yield alone doesn't say whether a fund's price is holding up or quietly being eaten away to help fund the payout — this looks at that separately, using the fund's real price history, not a prediction. Declining doesn't mean the fund is a bad choice; some funds are built to pay out more than they grow, on purpose. It just means part of what you're receiving may be a return of your own money rather than new income.

Est. +5.0%/yr price growth since inception (SI total return 11.55%/yr annualized over ~15.5 yrs since Jan 2011 vs. current yield ~6.55%)

This page is for informational and educational purposes only and does not constitute financial advice. It does not account for taxes, fees, or changes in distribution rates, and past distributions are not a guarantee of future payments. Consult a qualified financial advisor before making investment decisions.

Try the Portfolio Mix Calculator → to model ZWB.TO alongside other holdings.