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BMO Equal Weight Banks Index ETF (ZEB $59.15)
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iShares Canadian Financial Monthly Income ETF (FIE $10.10)
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Hamilton Enhanced Canadian Covered Call ETF (HDIV $21.41)
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Hamilton Canadian Financials YIELD MAXIMIZER TM ETF (HMAX $16.43)
Q: Half of my RIF focuses on steady, monthly income and the other half on individual stocks. To balance safety with higher income, I am looking to have equal weight in FIE and HMAX. As I rely on this monthly income, what do you think of this approach for long term holding? Can you suggest better alternatives?
5i Research Answer:
We have no issues with FIE or HMAX. The latter uses at the money options, so income is certainly enhanced but gains will lag in a sector rally. Our main comment here is that both are focused on the financial sector, so a portfolio at half (combined) is very exposed to financials. This is not necessarily bad but the exposure needs to be understood and accepted. We might look to HDIV for one of these instead. It does have 25% leverage but is far more diversified by sector.