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BMO Equal Weight Utilities Index ETF (ZUT $24.94)
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Hamilton Utilities YIELD MAXIMIZER TM ETF (UMAX $13.62)
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Evolve Canadian Utilities Enhanced Yield Index Fund (UTES $9.61)
Q: UMAX = covered call, UTES= covered call + 1,25% leverage. In a downtrend, UTES would probably go down around 25% more than umax (ex -10% vs -12,5%...) and ZUT.Since the markets are presently high +the economics, do you believe that there could be a significant probability of a downtrend in 2025 and in such case ,would it be safer to sell UTES for ZUT now (or another stock), in order to reduce the risk ?
5i Research Answer:
Keep in mind ZUT does not sell covered calls. In a downturn, call option premium will provide a small cushion in declines. UMAX utilizes in-the-money call options as well, so its cushion should be slightly larger than UTES, even before considering the use of leverage. So, in a downturn, on the assumption that similar securities are owned, UMAX may hold up better than the other two.