Investment Q&A

We do not have any particular objections to such a plan. The main con of course is it doubles up on company exposure. The CRA may also have an issue if one is claming tax losses on one since they are so similar (this only applies if a tax loss is taken and buying in the other security occurs within 30 days, but CRA likely would see them as too similar). The income ETFs will likely see a decay in value as return of capital is paid out. MSTE, for example, is down 12.68% in three months. Both income funds noted use leverage, which is a pro and a con depending on how things perform. Leverage adds risk overall. Fees are high on the income products, and fees are 0% on the stocks. The pro of course is getting high income from a non-dividend stock. If one is positive on the underlying stock, AND needs income, AND is comfortable with leverage, we do not see a big issue here. But these income funds need to be understood. In a negative market losses can easily outweigh any income. If an investor does not need an income flow, we see no real advantage as we do think the underlying stocks will still outperform on a total return basis over a decent time period.