Investment Q&A

HPYT holds longer-dated US treasury bonds and can write covered calls on up to 100% of the underlying holdings. The ETF aims to target a baseline of 75% on its covered call write level, however, but this high level of call writing is what enables the fund to pay a high distribution yield while not using leverage. 65% of its holdings is the TLT ETF, with the remaining holdings being: VGLT, SPTL, TLH, and EDV. The fund aims to pay an annualized distribution yield of 15%, it has a fairly low MER of 0.45%, and a small AUM of $10.2M. We think it's interesting and can provide a good level of monthly income for investors but with the ability to write 100% calls on the portfolio, if yields drop, bond prices will increase, and this ETF will see more downside in price than traditional bond ETFs.