This ETF’s high yield comes with higher risk

This ETF’s 6.8% dividend yield looks very appealing, but it conceals several risks for investors.

The fund’s currency hedging only favours investors under certain conditions, and the ETF’s need to buy covered call options can run up brokerage commissions and diminish overall returns.

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Q: Hello. I am a new member. Could you please give me your opinion of ZWE—an exchange-traded fund listed on Toronto. This ETF has a high yield of 6.8%. Thank you for your response.

A: BMO Europe High Dividend Covered Call Hedged to CAD ETF, $21.18, symbol ZWE on Toronto (Units outstanding: 33.9 million; Market cap: $718.0 million;, holds mostly high-quality European stocks. These include Swiss Re AG, HSBC Holdings plc, Zurich Insurance Group, BMW, Total SA, Teliasonera… Read More