If you’re not excited about the TSX’s performance lately, you’re not alone. Many stocks on the exchange have struggled this year and it can be frustrating seeing U.S. stocks perform much better. However, there’s an easy solution: investing in an ETF that holds a basket of U.S. holdings.
One ETF in particular that could be a great option for investors is the BMO Equal Weight US Banks ETF (TSX:ZBK) which will allow you to benefit from some of the top bank stocks south of the border. Wells Fargo & Co (NYSE:WFC) and JPMorgan Chase & Co (NYSE:JPM) are just a couple of the big names you can indirectly hold in your portfolio by owning this ETF. And with the current Republican government being very bank-friendly, it will put you in a good position to benefit from rising profits and share prices.
If you’re not convinced, consider the returns of the ETF against some of the top bank stocks on the TSX. Over the past five years, the ETF has risen by 70%, which is well above the 46% returns that Toronto-Dominion Bank (TSX:TD)(NYSE:TD) has been able to achieve during that time and it’s also more than the 37% increase that Royal Bank of Canada (TSX:RY)(NYSE:RY) has seen as well.
Year to date, the results have not been as convincing with the ETF’s returns closely mirroring TD’s performance. However, this is with the U.S. seeing a lot of controversy and unrest in its political environment. Under more stable conditions, I’d expect to see a much stronger performance from the U.S. bank stocks, and that’s why over the long term I see the ETF outperforming Canadian bank stocks.
