Q: What does this ETF hold and how does the covered call work? It is off the high of the year. Would now be a good time to purchase in TFSA for income and some growth as international exposure is low. If you prefer something else what would it be? Thank you!
5i Research Answer:
ZWE owns a portfolio of high dividend European stocks and sells call options against these positions in order to earn extra income, which it pays out to unitholders (current yield 7.06%). Its return to investors comes from dividends, call premiums and capital gains. For enhanced income and international diversification, we would be comfortable buying. Note that in a giant rally its performance will lag a 'straight' equity fund.