Should You Own This Top Bank ETF in 2022?

Canadian bank stocks bounced back in a big way in 2021. These top financial institutions thrived on the back of increased deposit and credit volumes and a big dip in provisions set aside for credit losses. However, there may be choppy waters ahead as the financial world looks to adapt to a tightening interest rate environment.

Rising interest rates may apply pressure to markets that have gorged on loose monetary policy. However, Canada’s big banks should see a boost in profitability in this climate. Investors who are interested in broad exposure to Canada’s top financial institutions should consider the BMO Equal Weight Banks ETF (TSX:ZEB).

Shares of this ETF have dropped 2.9% in 2022 as of close on April 14. Its shares are still up 15% in the year-over-year period. This fund aims to track the performance of the Big Six Canadian bank stocks. Investors will have to take on a relatively modest MER of 0.28%. The fund possesses a medium risk rating. It launched all the way back in October 2009.

Canadians should recognize the top holdings in this fund. From the heaviest weighting to the lowest, it includes top bank stocks like Royal Bank, Bank of Montreal, National Bank, TD Bank, Scotiabank, and Canadian Imperial Bank of Commerce. This ETF last had an RSI of 31. That puts it just outside of technically oversold territory. I’m looking to snatch up this ETF on the dip.