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State Street SPDR S&P 500 ETF Trust (SPY $718.01)
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INVESCO QQQ Trust (QQQ $672.88)
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Hamilton Canadian Financials YIELD MAXIMIZER TM ETF (HMAX $16.53)
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NEOS Nasdaq 100 High Income ETF (QQQI $54.51)
Like others have mentioned, I have also learned and profited from following 5i and I thank you. I usually listen especially closely when you speak about your own strategies. In that regard I was intrigued by an answer you gave concerning your own portfolio size i.e. 15 stocks and 3 covered call etf’s. It raised several questions. I appreciate your willingness to talk about your own holdings, and this encourages me to ask the following questions. If you feel, however, that they are too personal for a public forum I certainly understand. If you feel comfortable answering, though, I would like to get more detailed information:
1.First is that there seems to be no mention of fixed income. I assume that you don’t hold any and further assume that the reason for this is that if one has enough funds one can withstand a sizable meltdown of the stock market without too much concern. I ask this because I am always wavering about whether to hold fixed income.
2. I notice that you don’t mention any vanilla flavoured etf’s, such as SPY or QQQ. Does this mean that you see the covered call etf’s as a suit iable substitute for them? The question I am getting at here is whether they would be good for all seasons or simply in times like this?
3. Do you now use these covered call etf’s as an easier way to make money on covered calls than selling calls on individual stocks?
4. If you hold 15 stocks as well as three etf’s, what kind of percentage might each one represent and the etf’s?
5. I am planning to use this strategy, But, for the moment I need to buy on margin, Canadian margin has a lower interest rate than US. So I was looking at Hamilton’s QMAX.It looks similar but I wondered what you thought.
thanks
1) We (Peter) have owned fixed income in the past but none right now. We are fortunate in that, yes, we can survive a market hit (and have lived through every crash including the 1987 crash on margin!). Since we monitor markets 24/7, we feel (rightly or wrongly!) that we will be able to manage an all equity portfolio. We also hate paying taxes on fixed income, and prefer growth in our registered accounts. 2) Our covered call exposure is specifically to add tax-deferred income (ROC distributions). We have four kids and our income needs are still high. Once income is less of a goal, we would far prefer plain vanilla ETFs for greater upside potential. 3) Because we also manage the i2i Long/Short hedge fund, ANY trades we do need to be cleared by our compliance team. We like using individual stocks and covered calls, but because of this extra step we have shifted to ETFs, where clearance is not required. 4) Our weightings keep getting skewed by a couple of big winners. Two stock holdings are above 8% currently. The rest of the stocks and ETFs are more balanced. 5) HMAX is specialized (financials) but has a 20.01% three year compound return and looks fine to us.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in SPY, QQQ, QQQI.