High Yield Bank ETFs: An Accountant's Warning (ZWC, HCAL, HMAX)

Are those double-digit yields from Canadian bank ETFs like HMAX, ZWC, HCAL, BANK, and ZWB too good to be true? In this deep dive, a Canadian accountant reveals the critical warnings and hidden tax traps you need to know before you invest.

Chasing high yields without understanding the risks can cost you thousands. We go under the hood of these popular covered call and leveraged ETFs to uncover the truth about their distributions. You'll learn about Return of Capital (ROC), how it impacts your Adjusted Cost Base (ACB), and how to tell if a payout is sustainable or simply NAV erosion. This is the guide to high-yield ETFs every Canadian investor needs to see.

Timestamps
00:00 - The High-Yield Dilemma
00:59 - Deep Dive 1: ZWC & ZWB (The Covered Call OGs)
03:11 - The Accountant's Perspective: Tax, ROC & Sustainability
05:33 - Deep Dive 2: HCAL (The Pure Leverage Play)
07:41 - Deep Dive 3: HMAX (The Yield King & ROC Warning)
09:02 - Deep Dive 4: BANK (The Hybrid Strategy)
10:44 - Who Are These ETFs Really For? (TFSA vs. RRSP vs. Non-Reg)
12:06 - Final Verdict & Key Takeaways

✅ WHAT YOU'LL LEARN ✅
► Breakdown of 5 Canadian High-Yield ETFs (ZWC, HCAL, HMAX, BANK, ZWB).
► The difference between Covered Call vs. Leveraged ETF strategies.
► What Return of Capital (ROC) is & how it impacts your taxes.
► How to track your Adjusted Cost Base (ACB) for these funds.
► The risks of NAV erosion & how to check for it.
► Best accounts for these ETFs (TFSA, RRSP, Non-Registered).
► An accountant's take on passive income vs. long-term growth.

🤔 WHO IS THIS VIDEO FOR? 🤔
This video is essential viewing if you are:
► A Canadian dividend investor looking for higher monthly cash flow from your portfolio.
► A retiree or near-retiree considering covered call ETFs for passive income in Canada.
► Confused about the tax implications of ETFs that pay Return of Capital (ROC) and how it affects your ACB.
► Trying to decide between ZWC, HCAL, and HMAX for your TFSA or RRSP.
► A beginner investor wondering if these complex high-yield funds are a safe alternative to simple index funds like ZEB or XFN.

🔎 ETFs DISCUSSED IN THIS VIDEO 🔎
• HMAX (Hamilton): High-yield covered call ETF on Canadian financials. Uses an aggressive strategy, often resulting in high Return of Capital (ROC).
• ZWC (BMO): A popular covered call ETF on high-dividend Canadian stocks for enhanced monthly income.
• HCAL (Hamilton): A leveraged ETF (1.25x) on the Big Six Canadian banks, aiming for amplified growth and dividends without covered calls.
• BANK (Evolve): A hybrid ETF using both covered calls and leverage on Canadian banks & lifecos for its high yield.
• ZWB (BMO): A covered call ETF focused specifically on Canadian banks to generate extra income.
• ZEB & XFN (Alternatives): We compare the funds above to simpler, low-cost index ETFs designed for long-term growth.

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Disclaimer: The content in this video is for educational and informational purposes only. It is not intended to be a substitute for professional investment, financial, or tax advice. Always seek the advice of a qualified professional with any questions you may have regarding a financial matter. The creator is not a licensed financial advisor. Any action you take upon the information on this video is strictly at your own risk. Past performance is not indicative of future results. The description of this video includes Affiliate links (I get paid at no cost to you for trying out a particular service.)

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