Q: What do you think about UMAX in a TFSA to generate monthly tax free income. Are there any issues related to ROC with this ETF in a TFSA.
5i Research Answer:
There are no ROC tax issues inside a TFSA. That being said, some investors prefer to have return of capital investments in a non-registered plan as a tax-deferral strategy (of course, TFSAs are always tax-free so are still 'better'). Using at-the-money options will reduce UMAX's potential in a sector rally, but we do not have anything against it or its strategy. It is important though to look at total return and not just the yield. For example its indicated yield is 14.02% but its one-year return is only 4.15%.