umax at 13.7% and zmu at 8.1%
would umax not be the obvious choice for an income investor?
thankyou
Both funds use a covered call strategy to boost yield, and neither fund uses leverage. The main difference in yield between the two is derived from UMAX using an 'in the money' call strategy rather than ZWU which uses an 'out of the money' call strategy. In the money calls are more expensive than out of the money, and thus UMAX earns a higher call premium, but this can limit its upside potential as positions get called away earlier in a rising market. For an investor solely looking at yield rather than the effect of capital appreciation, we would prefer UMAX here, although when considering capital appreciation, ZWU will likely retain its share price better than UMAX.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in ZWU.