Q: What do you think of Europe and specifically of ZWP? It's been trading within the same range since March and while the yield of 6.75% is nice, it has very high MER of 1.7% and barely moves with the market. The ETF is in my RRSP. Would you replace it with something else or wait patiently for Europe's recovery?
5i Research Answer:
Europe had made solid progress in its recovery from the bottom in 2022. Things have flattened out in 2024 as the economy slowed, but ZWP has done decently well with it covered call strategy, up nearly 10% year-to-date and 16% over the last year. We see that the MER is 0.72% which is still on the upper end, but not terrible for an active strategy. We think the European market has some attractive names in it and there is potential. It may take a bit longer here for a full recovery and breakout, but we think ZWP is a good way to get exposure due to the income it provides.