Investment Q&A

With any low-volatility strategy, of course, we would prefer to see longer term performance numbers, just to ensure the strategy does what it intended. It holds 40 securities and sells covered calls on its positions to enhance income. Indicated yield is 7.44%. Some of this will be taxed as return of capital, most likely (we will need to wait to se the full tax breakdown since the ETF is so new). Its holdings are the typical Canadian large cap stocks, with a 35% financial sector weighting. We have no issue with its set up nor strategy. But...it is all equity based, and in a serious market correction it is still going to go down, perhaps a lot. The call option premium only provides a small cushion in a downturn, but income will continue. Investors need to understand call option strategies, and even a 'low vol' fund can still decline. But overall we would be comfortable here for an enhanced income Canadian equity product.