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Royal Bank of Canada (RY $227.16)
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Toronto-Dominion Bank (The) (TD $124.98)
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BMO Equal Weight Banks Index ETF (ZEB $57.48)
Q: Good morning,
If one wanted 15% exposure to Canadian banks, would you buy TD and RY for 7.5% each, or would you buy TD, RY and ZEB for 5% each?
Thanks as always.
If one wanted 15% exposure to Canadian banks, would you buy TD and RY for 7.5% each, or would you buy TD, RY and ZEB for 5% each?
Thanks as always.
5i Research Answer:
While we cannot personalize responses, we think that TD and RY over a long period of time can work quite well for investors. But, we have also conducted research that shows when one of the large Canadian banks underperforms in any given calendar year, it has historically been one of the largest outperformers of the banks in the following year. For this reason, we feel that ZEB can help to balance things out from year-to-year, but, largely, for a long-term holding, we think that TD and RY can outperform the broader group.