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Hamilton Enhanced Multi-Sector Covered Call ETF (HDIV)
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Hamilton Enhanced U.S. Covered Call ETF (HYLD)
Q: Did you happen to read the article in today's Globe & Mail "Don’t be seduced by the juicy yields of covered calls " by Dan Hallett?
I have recently invested in HDIV and HYLD just for those juicy yields produced by the covered call stratagey. Now I am second guessing this idea tempting as the yields are.
What are your thoughts?
Thank you as always for your input.
David
I have recently invested in HDIV and HYLD just for those juicy yields produced by the covered call stratagey. Now I am second guessing this idea tempting as the yields are.
What are your thoughts?
Thank you as always for your input.
David
5i Research Answer:
We think covered call funds are fine as long as an investor understsnds what they are buying. They can provide good income that can have some tax advantages, some stability, and some upside potential as well. Offsetting these are fees (of course) and the fact that they will underperform in a market rally. But for investors who are OK with trading upside potential for current income, we view them as OK.