Then there’s the Hamilton Canadian Bank Mean Reversion Index ETF (HCA), which tracks the Solactive Canadian Bank Mean Reversion Index TR. Every quarter, HCA typically allocates 80% of its portfolio to the three banks that have underperformed recently, and 20% to the three that have outperformed, banking (pun intended!) on the idea that underperformers could bounce back.
These custom strategies can come at a higher cost. TBNK charges a 0.28% MER, RBNK comes in at 0.32%, and HCA tops the list at 0.45%. So far, those extra fees haven’t translated into major outperformance. From May 2023 to May 2025, total returns for these ETFs have been within about 1% cumulatively above or below the simpler equal-weighted ZEB.
HCA, TBNK, RBNK and ZEB historical cumulative total returns
Use case: These ETFs just might be a fit if you want to get a little fancier with your exposure—making a more active bet on which banks will outperform based on dividend growth, yield or price reversion—and are comfortable paying higher fees for the possibility (not a guarantee) of outperformance.
These ETFs fall under the umbrella of alternative strategies, meaning they go beyond traditional long-only buy-and-hold approaches. They often employ derivatives or leverage, aiming to enhance some aspect of exposure, whether that’s yield, price returns or both.
A classic example is the BMO Covered Call Canadian Banks ETF (ZWB). It holds all six major banks, mirroring ZEB, but it layers on a covered-call strategy by selling options on its holdings. This caps upside but boosts income, generating a yield made up of dividend income, capital gains and return of capital.
BMO sells these calls out of the money and on a discretionary basis, meaning not every position is covered at all times, giving the portfolio slightly more upside potential compared to systematic call-writing strategies. You could get a solid 6.66% distribution yield, but with much more muted price appreciation.
The Hamilton Enhanced Canadian Bank ETF (HCAL) can be used for a different approach. It doesn’t use options at all. Instead, it applies 1.25 times (125%) leverage to the Solactive Equal Weight Canada Banks Index, the same one used by ZEB, HEB and HBNK.
Unlike typical leveraged ETFs that reset daily via swaps, HCAL borrows money using cash margin loans, which means its returns aren’t distorted by daily compounding. This setup amplifies both upside and downside, and also boosts yield to 6.42%, as distributions are paid on the larger notional exposure.
.jpg "What Flexible Software Doesn’t Tell You")
