Q: Hi 5i team!
Looking at the yield of this Hamilton new strategy, is the 17-20% dividend sustainable ? Will the price fall at some point or will they have to lower the dividend ?
Thanks
Looking at the yield of this Hamilton new strategy, is the 17-20% dividend sustainable ? Will the price fall at some point or will they have to lower the dividend ?
Thanks
5i Research Answer:
These ETFs use an ultra-short option strategy. Generally, prices will decline as much of the dividend will be return on capital. They are too new to gauge how net asset value will be impacted, however. Total net returns could still be decent here. If yield is 17% we might expect a 5% value decline, so net return could still be attractive. But it is just too early to ascertain. But, we would still consider them decent products for investors that do want enhanced income.