Over a long period of time, XLF has outperformed ZEB on a capital appreciation basis, however, performances have been quite similar when including the high distribution yield of ZEB.
ZEB has an MER of 0.28%, a distribution yield of 5.2%, and holds the six large Canadian banks, equally-weighted. XLF has an MER of 0.1%, a distribution yield of 1.7%, and has 72 holdings across the financial services, banks, capital markets, and insurance industries.
For a more liquid, low-cost, diversified approach, we would prefer XLF, however, for a more concentrated play on the Canadian banks with a higher yield, we would prefer ZEB.