Q: What are your thoughts on CNYE. How can they offer to pay 32% dividend. Is this worth investing.
Thanks for your excellent service
Thanks for your excellent service
5i Research Answer:
CNYE is a single stock, leveraged ETF based on the performance of COIN stock, and COIN only. The high income comes from leverage and the use of call options on 50% of the portfolio. The leverage can enhance returns but also enhances risk. The yield should not be looked at in isolation. The fund regularly pays out more than it earns, so unit value declines. Total return is negative 19% in the past three months. We do not endorse these products as they are essentially a 'bet' on a single company, and the funds often underperform the underlying shares anyway, but have more risk.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in COIN.