Top three ETF trades for 2026

Key Concepts

• Federal Reserve Independence: The principle of central banks operating without direct political interference, crucial for effective monetary policy.
• AI Investment Shift: Transition from a broad “beta” play in AI (where all stocks rise with the tide) to a more selective environment with winners and losers based on capital allocation and structure.
• Covered Call Strategy: An investment technique involving holding an asset and selling call options on it to generate income (yield).
• Covered Call Spread: A more complex strategy involving both buying and selling call options to participate in asset price movements while generating yield.
• Long/Short Equity ETF: An ETF that simultaneously invests in stocks expected to rise (long positions) and those expected to fall (short positions).
• Diversification & Gold: Utilizing gold as a portfolio diversifier, particularly in environments where fixed income may correlate with equities.

Market Uncertainty, AI Rotation, and ETF Strategies – A Discussion with Bitpan Ry

The discussion centered on navigating current market uncertainties, particularly concerning political pressure on the Federal Reserve, the evolving AI investment landscape, and potential strategies utilizing Beimo Global Asset Management’s ETFs.

Political Pressure on the Federal Reserve

The conversation began with the unprecedented situation of a US government potentially threatening to prosecute the head of the Federal Reserve. Bitan Ry noted this is “uncharted waters,” drawing parallels to the 1970s, a period marked by high inflation. He emphasized the importance of central bank independence, a principle successful in taming inflation across developed economies during the “great moderation.” He highlighted Tiff Macklem, Governor of the Bank of Canada, supporting J. Powell as a significant event, demonstrating the international recognition of this principle. Ry argued that operational independence from fiscal policy is vital for central banks to effectively manage inflation and avoid a return to “fiscally dominant” monetary policy.

AI Investment Landscape – From Beta to Selective Strategies

The discussion then shifted to the AI sector. While acknowledging the continued relevance of AI investment, Ry suggested a shift is occurring. He posited that AI is moving “away from being a pure beta play,” meaning simply investing in the sector no longer guarantees returns. He anticipates a divergence between winners and losers, dependent on two key factors:

1. Capital Expenditure Financing: Whether capital expenditure is funded through operating cash flows or external debt.
2. Capital Structure: The financial makeup of AI firms.

In this evolving environment, Ry believes covered call strategies targeting the tech sector can outperform, offering both potential upside and an attractive yield.

Beimo ETF Strategies – Detailed Overview

Several Beimo ETFs were discussed as potential navigation tools:

1. Beimo Covered Call Technology ETF (ZWT): Launched in early 2021, ZWT has achieved a total return of 150% in Canadian dollar terms, outperforming the NASDAQ 100. Ry attributed this success to the ETF’s composition, structure, and the portfolio management team’s expertise, alongside the yield generated through the covered call strategy. A “covered call strategy” involves selling call options on the underlying assets to generate income, which adds to the overall return.

2. Beimo Long Short Canadian Equity ETF (ZLC/ZLSC): This ETF leverages quantitative (quant) analysis to identify winners and losers within the Canadian stock market. Ry explained that Beimo’s quant team utilizes specific frameworks and screens to optimize the portfolio. The ETF performed well in 2025 and is expected to continue to do so in 2026, particularly during periods of broader market growth (like the TSX).

3. Beimo Covered Call Spread Gold Bullion ETF (ZWGD): Launched in May of last year, this ETF aims to address the traditional drawback of gold – its lack of yield. Ry explained that a “covered call spread” (distinct from a simple covered call) allows investors to participate fully in gold price movements while simultaneously harvesting a yield. This makes gold a more attractive diversifier, especially in an environment where fixed income may correlate positively with equities due to persistent inflation. While ZWGD has underperformed gold stocks (XGD up almost 90% vs. ZWGD’s 33% since launch), Ry argued its yield component could provide downside protection if gold prices retrace in 2026, potentially leading to outperformance.

Canadian Market Concerns & Political Influence

The conversation touched upon Canada’s recent backing down from certain measures (like the digital services tax) in an attempt to appease the US. Ry suggested this could create “choppy” conditions for Canadian stocks in the coming year, reinforcing the value of strategies like ZLC/ZLSC that can navigate market volatility.

Data & Performance Metrics

• ZWT Total Return: 150% (CAD) since launch in early 2021, outperforming the NASDAQ 100.
• ZWGD Total Return: 33% since launch in May of last year.
• XGD (iShares Gold Bullion ETF) Total Return: ~90% since May of last year.

Conclusion

The discussion highlighted a complex market environment characterized by political uncertainty, a shifting AI investment landscape, and the need for sophisticated strategies to navigate volatility. Bitan Ry presented Beimo’s ETFs as potential solutions, emphasizing the importance of active management, quantitative analysis, and innovative strategies like covered call spreads to generate returns and mitigate risk. The key takeaway is a move towards more selective investment approaches, particularly in the AI sector, and the utilization of diversified assets like gold, enhanced with yield-generating strategies, to protect portfolios in an uncertain economic climate.