Q: Given the rather negative outlook for Canadian banks,would a position in Hmax for. 1 to 2 year hold for income and preservation of capital be advised? Thank you.
5i Research Answer:
We would consider HMAX decent in such a scenario. We are not concernd about bank dividends, and while sentiment is indeed low, so are valuations. In a choppy/flat market the covered call strategy make actually outperform as options will be less likely to be exercised. Note these types of funds can still decline with the market, but the enhanced income can cushion the blow somewhat.