ZWU.TO DRIP & Distribution Calculator

What is ZWU.TO?

BMO Covered Call Utilities ETF, launched October 20, 2011.

ZWU.TO — BMO Covered Call Utilities ETF

This one classifies as an income fund, not a blend. Backing out the math: BMO's own 10-year annualized return is 6.4%, and the current yield is around 7% — meaning essentially all of the total return has come from the distribution, and the unit price itself has been roughly flat to slightly down over the past decade once you account for the yield. That's a meaningfully different profile from ZWC or ZWB, where a real chunk of the return was actual price growth.

ZWU holds a mix of utility, pipeline, and telecom companies — about 58% Canadian, 42% U.S. (with foreign currency hedged back to Canadian dollars), covering names like Fortis, Hydro One, Emera, Enbridge, TC Energy, and on the U.S. side Verizon, AT&T, and NextEra Energy. It's more spread out than ZWB (108 holdings vs. ZWB's 6), but the sector story is the same idea: about 58% utilities, 21% energy (mostly pipelines), and 21% communication services (mostly telecom) — three sectors that all tend to behave similarly, since they're all rate-sensitive, dividend-heavy businesses rather than a genuinely diversified basket. Covered calls are written across the portfolio on top of that to boost the monthly payout.

On fees: the MER is 0.71%, in the same range as BMO's other covered-call funds.

It pays monthly, currently around $0.07/unit, working out to a yield around 7% at today's price (roughly $11.50-11.80) — the highest yield of the BMO covered-call funds covered so far. Performance has been positive lately (up about 13% in 2025), but the fund's own official numbers show it's had real rough patches: down in 4 of the last 10 calendar years, and its worst 3-month stretch (ending March 2020) took a $1,000 investment down to $823. Utilities, pipelines, and telecom are all rate-sensitive sectors, so this fund tends to feel interest-rate moves more directly than a bank- or broad-market-focused fund would.

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 ZWU "Medium" risk. Analyst sentiment on Stockchase is strongly positive — 20 buy calls to 2 sell over the past year, with recurring praise for its defensiveness, its high yield, and (more recently) growing interest in utilities generally due to rising electricity demand from data centers and AI infrastructure. The caution that shows up consistently isn't about the fund's structure, it's about rates: several analysts specifically flag that rate-sensitive sectors like this one can underperform when interest rates rise, and the general advice leans toward holding it as one piece of a diversified income sleeve rather than a full allocation on its own. Given the essentially flat price-growth math above, that caution is worth taking seriously — this fund's total return depends almost entirely on the distribution holding up.

Plain-English bottom line: The "Medium" rating covers volatility — but the more useful framing is that this is close to a pure income play. Nearly all the historical return has come from the yield, the underlying price has been roughly flat over a decade, and rate-sensitivity is the main thing to watch.

Price trend: Declining

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. -1.7%/yr price decline since inception (SI total return 5.49%/yr annualized over ~14.8 yrs since Oct 2011 vs. current yield ~7.17%) - typical covered-call NAV erosion

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.

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