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BMO Covered Call Utilities ETF (ZWU $11.33)
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CI Tech Giants Covered Call ETF (TXF $23.44)
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Canoe EIT Income Fund (EIT.UN $15.36)
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Hamilton Utilities YIELD MAXIMIZER TM ETF (UMAX $13.36)
Q: Hello!
Now that I’ve reached the age of RRIF withdrawals, I’m looking more closely at income and therefore at covered-call ETFs.
I understand that these instruments don’t fully share in the upsides, but the income of ETFs like EIT, TXF and ZWU is pretty solid.
I’ve also been looking at UMAX its unbelievable 14% yield, but I also see that the unit price has declined quite dramatically over the last few years.
So questions are, how do you feel about these ETFs for income? And if you’re okay with them, which would you recommend?
Thanks for all your help
Michael
Now that I’ve reached the age of RRIF withdrawals, I’m looking more closely at income and therefore at covered-call ETFs.
I understand that these instruments don’t fully share in the upsides, but the income of ETFs like EIT, TXF and ZWU is pretty solid.
I’ve also been looking at UMAX its unbelievable 14% yield, but I also see that the unit price has declined quite dramatically over the last few years.
So questions are, how do you feel about these ETFs for income? And if you’re okay with them, which would you recommend?
Thanks for all your help
Michael
5i Research Answer:
We do not love closed-end funds, but EIT.UN has a five year annualied return of 21.47%, and it is hard to argue with that. It also made money in 2022 (unlike most funds) and only lost a bit in 2018. ZWU looks fine with enhanced income in the utility sector. TXF has benefited from the sector but 5-year is 15.73% so it has handled the volatility well. UMAX has been a laggard, with one year return 6.17% despite the high yield. If ZWU is owned we would not see the need for UMAX.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in ZWU, TXF.