Q: In an answer to John you stated that you would expect ZWU " would likely retain its' share price better than UMAX " . Though UMAX hasn't been around long enough for a comparison I think one can speculate on what return might be expected as fifty percent of their portfolio are utility stocks with no calls written on them . So I would think the capital gain would be fifty percent of the utilities index. For example if the index returned 8% annually UMAX should return 4% which would reflect the percentage of the portfolio that is stocks { half the portfolio }. I would think that might be a good educated guess ..... ZWU on the other hand has been around for a while. So my question is has ZWU historically beaten fifty percent of the annual return of the utilities index ? And what has their historical annual percentage been compared to the utilities index ? ......
What I am shooting for here is a way to calculate whether the difference between ZWU's return and the utilities index return is enough compensate for a 5.6% lag in yield between it and UMAX ...... Thanks Garth .....
What I am shooting for here is a way to calculate whether the difference between ZWU's return and the utilities index return is enough compensate for a 5.6% lag in yield between it and UMAX ...... Thanks Garth .....
5i Research Answer:
Please see another answer posted today on UMAX for some more details. The return expectation (50%) is a bit off, as it does not account for the options premium received on the other half of the portfolio. This will vary, but is always going to be more than 0%. For one month (the only data), UMAX is down 1.6% and ZWU is down 2.07%. With UMAX selling 'at the money' (ATM) calls this shows how premium income is higher using ATM options. ZWU has a five-year return of 3.17%. The utilities index is 4.48%.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in ZWU.