Big gains for the Big Six banks

An ETF that invests in all of them

Don’t deposit your money in banks. Invest it in bank stocks.

I asked ChatGPT for the source of this quote. Turns out there isn’t one. Warren Buffett went part way, saying: “Don’t put your money in the bank.” It was his way of encouraging productive investments, rather than cash savings.

The rationale makes sense. Banks, especially the big ones, pay woefully low interest on deposits. But bank stocks are a different story. The S&P/TSX Financials sub-index, which is mostly made up of banks and insurers, has outperformed the TSX Composite for three consecutive years. It gained just over 9% in 2023, followed by 25% in 2024 and 35.3% in 2025.

This comes as a bit of a surprise, due to the sluggish growth of the Canadian economy and the increasing number of debt defaults. Some of the smaller banks have been hurt as a result – the shares of EQB Inc. (TSX: EQB), which owns EQ Bank, are marginally in the red this year. But the Big Six are thriving.

Top performer has been Toronto-Dominion Bank (TSX: TD), which has rebounded from last year’s selloff that stemmed from money laundering charges against its U.S. operations. The result was a loss of 10.6% for the shares in 2024. But it didn’t take long for investors to put all that behind them and move on. TD stock was up 68% in 2025, more than double the gain of industry leader Royal Bank of Canada (TSX: RY).

Runner-up is Canadian Imperial Bank of Commerce (TSX: CM), with a gain of 40.6%. The rest of the major banks have posted gains between 29% and 32%.

If you don’t want to pick individual stocks, an easy way to invest in the big banks is to buy units of the BMO S&P/TSX Equal Weight Banks Index ETF (TSX: ZEB).

ZEB invests on a more-or-less equal basis in the shares of the Big Six Canadian banks. The ETF was launched in October 2009 and has $5.4 billion in assets under management. The MER is 0.28%. It pays a monthly distribution that approximates the dividends paid by the banks.

The units recently traded at $59.32, near their all-time high. The fund gained 43.5% in 2025 and shows an average annual compound rate of return of 12.9% since it was launched in October 2009.

TD is the largest position in the fund, with a weighting of 17.34%. CIBC is next at 17.09%. Bank of Montreal has the lowest weighting, at 15.19%.

Distributions are paid monthly at a current rate of $0.145 per unit ($1.74 a year). The yield at the current price is 3%. Last year, total distributions were $1.68 per unit. Of that, about $1.63 (97%) was considered capital gains for tax purposes. The rest was return of capital. This tax efficiency makes the fund a good choice for non-registered accounts. Of course, no taxes are incurred if the units are held in a registered plan.

Obviously, if the banking sector were to take a big hit, as during the financial crisis in 2007-2009, this ETF would suffer major losses. However, those would likely be temporary. Royal Bank stock hit a low of $10.66 in early 2009, a loss of about two-thirds from its 2007 high. By 2010, it had regained all that ground and more, reaching a high of over $34.

This ETF should be a core holding in conservative accounts. As always, consult with your financial advisor before investing to ensure the fund aligns with your financial objectives and risk tolerance level.

Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.

Follow Gordon Pape on X at X.com/GPUpdates and on Facebook at www.facebook.com/GordonPapeMoney.

For more information and details on how to subscribe to Gordon’s newsletters, go to www.buildingwealth.ca/subscribe.

Notes and Disclaimer

Content © 2026 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.

Image: iStock.com/Peter Mintz