Q: I was considering selling FRU to buy ENCC. They seem to follow each other and ENCC has almost 2 times the yield. What would be the your thoughts on this trade? Thanks, James
5i Research Answer:
We can't properly compare a single company to a diviersifed covered call ETF. FRU is going to have more upside potential and downside risk than an ETF focused on income that holds dozens of securities. ENCC has an indicated yield of 13.3%, but its covered call strategy can limit capital gains in a rally. But its five-year return is still a very acceptable 15.4%, even with high fees (0.84%). For an energy sector investor looking for enhanced income, we would be fine with such as switch, but it is not a fair comparison here.