Q: NXF is a covered call EFT. Do you have a recommendation for an energy sector ETF that does not sell covered calls? Within my RRSP, I would like to own two ETF’s, the energy sector, to hold my energy related investments. Is there a rule of thumb to guide the percentage one should put into each (ie: 25% in a covered call ETF; 75% in an ETF which does not sell covered calls)?
Thanks for your help.
Thanks for your help.
5i Research Answer:
We would suggest XEG for a 'straight' ETF. There is not real rule of thumb. Covered call exposure depends on an investors' need for income and their willingness to give up capital gains in exchange for this income. Over a long time period, non covered call funds will almost always outperform on a net basis.