New fund offers investors equal-weighted index exposure to top banks in Europe
Canadian investors now have an option to get exposure to financial services companies overseas, thanks to a new ETF from Evolve Funds.
Trading under the ticker symbols EBNK for CAD-hedged units, EBNK.B for CAD unhedged units, and EBNK.U for USD unhedged units, the Evolve European Banks Enhanced Yield ETF on the TSX aims to track the performance of an equal-weighted index of the top 20 European banks by market capitalization, while writing covered-call options on up to 33% of the securities.
"European banks were one of the top performing sectors in Europe last year and posted their best returns since 2009,” said Raj Lala, president and CEO of Evolve ETFs. “The sector is currently trading at steep discounts relative to pre-COVID levels and other regions like the US. Improving economic growth, higher earnings expectations, and lifted dividend restrictions have continued to attract assets to the sector in early 2022.”
The ETF’s current benchmark, the Solactive European Bank Top 20 Equal Weight Index Canadian Dollar Hedged, measures the performance of equity securities of the largest European banks on an equal-weighted basis, and hedges foreign currency exposure back to Canadian dollars.
“Given current valuations, European banks may offer investors diversification benefits and potentially more upside than North American counterparts," Lala said.