Q: hi,
a 5 year chart shows diminishing share price of ZWU, and slight increase in ZUT. can you explain this? is this because the covered call strategy is somehow eroding value/share over longer periods of time? it seems to be too much of a discrepancy to be explained by getting having to sell the underlying equities occasionally due to the call options in a rising utility equity market?? your thoughts would be most appreciated.
a 5 year chart shows diminishing share price of ZWU, and slight increase in ZUT. can you explain this? is this because the covered call strategy is somehow eroding value/share over longer periods of time? it seems to be too much of a discrepancy to be explained by getting having to sell the underlying equities occasionally due to the call options in a rising utility equity market?? your thoughts would be most appreciated.
5i Research Answer:
On a total return basis, over 5 years, we show the returns as being quite similar with ZUT at 39.9% and ZWU at 40.1%. On price only, we show ZUT up 15% and ZWU down 4%. In turn, it does appear a lot of the difference here in price return is due to the covered call approach but it is important to keep in mind the overall total returns remain quite similar.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in ZWU.