ZWT ETF – BMO Covered Call Technology – Exchange Traded Fund Review

  • 4 min read

The BMO Covered Call Technology ETF is an exchange-traded fund through the Toronto Stock Exchange (TSX), with a stock ticker symbol of ZWT. As a portfolio strategy, it’s been created to offer investors exposure to a portfolio of technology and technology-related businesses across North America, while receiving call option premiums. Therefore, a major benefit to ZWT investors is monthly income generation balanced with potential capital gains over time.

As an individual investor dabbling in writing covered calls, a level two trading account would be required as well as a significant amount of time needed for research and trade execution. An EFT has the scale needed to make writing covered calls easier and more diversified than you could do likely on your own. BMO Global Asset Management professionally manages this ETF.

This fund allows individuals to invest in securities of these types of companies in addition to writing covered call options. These “call option” selections are based on reviewing and weighing out the option’s understood volatility and then written out of the money.

The option premium offers some downward protection. The fundamental portfolio is reconstituted and re-balanced twice a year in June and December. Options are rolled on until they expire. The BMO Covered Call Technology ETF looks to provide investors a way to get into the performance of a portfolio that encompasses technology/technology-related organizations to help heighten income, all while mitigating downward risk and providing long-term capital appreciation via the use of covered call options. The risk rating of this portfolio is set at “medium”.

There are added details to this portfolio. The currency exchange is conducted in Canadian dollars. The inception date of the BMO Covered Call Technology ETF was January 20, 2021, and the fiscal year-end is December 31, 2021. The annual management fee is set at 0.65%, while the management expense ratio is at 0.73%. This strategy portfolio is RRSP and DRIP eligible. It’s also eligible for TFSAs, RRIFs, and RESPs.

The  BMO Covered Call Technology ETF distribution frequency is monthly and added fund characteristics include net assets (Mn) that are at $ 17.89. While its number of securities is at 30, the fund’s outstanding shares are at 505,001, and the market cap ($Bn) is 15,262.49. The EFT’s price/earnings ratio is at 39.51, while its price/book ratio is 4.87. Most importantly, the annualized distribution yield (%) hangs at 4.98.

The 12-month low/high (market price) from this fund is $29.91 / $32.30, and 12-month low/high (price (NAV)) is at $28.8357 / $32.2776. Its annual distribution yield (as of May 7, 2021) is 5.11%. There is no swap fee or counterparty exposure on the ETF, and its market volume is at 24,041. As of May 2021, the units outstanding are 605.0 K, and its CUSIP is 05590J103.

The breakdown of sector allocation for the BMO Covered Call Technology ETF is vast. Industries that fall within its umbrella include data process and outsourced services (17.88%), interactive media and services sub-industry (16.84%), semiconductors (15.20%), systems software (11.38%), internet and direct marketing (8.37%), application software (8.18%), technology hardware (6.94%), IT consulting and other services (4.21%), movies and entertainment (3.11%), and “others” (7.89%). Lastly, the geographic allocation of this portfolio strategy is set at 1.9% within Canada, and 98.06% across the United States of America.

Its top 10 company holdings, listed in order from 1 to ten, include Facebook (6.17%), Alphabet Inc. (6.10%), Microsoft Corp. (5.61%) Amazon.com Inc. (3.47%), Apple Inc. (3.45%), Visa Inc. (3.42%), Mastercard Inc. (2.87%), Nvidia Corp. (2.75%), PayPal Holding Inc. (2.22%), and Adobe Inc. (2.16%)

To learn more about the BMO Covered Call Technology ETF, you can call Global Asset Management at 1-800-361-1392, send along an email, or visit their Bmo etf website.

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Christopher - BSc, MBA

With over two decades of combined Big 5 Banking and Agency experience, Christopher launched Underbanked® to cut through the noise and complexity of financial information. Christopher has an MBA degree from McMaster University and BSc. from Western University in Canada.