Investment Q&A

Q: Hello, I am turning 60 in January, while I still work, I would love to retire in a couple of years, would it be a reasonable portfolio to migrate my portfolio to a more income focused, covered call strategy portfolio, in general terms, I know you cannot get personal. I think the vast majority will be broad based ETFs with maybe 25% using leveraged based ETFs. From what I have seen, the BETA for these funds seems to be a lot less than there non covered call cousins.

Q: UMAX = covered call, UTES= covered call + 1,25% leverage. In a downtrend, UTES would probably go down around 25% more than umax (ex -10% vs -12,5%...) and ZUT.Since the markets are presently high +the economics, do you believe that there could be a significant probability of a downtrend in 2025 and in such case ,would it be safer to sell UTES for ZUT now (or another stock), in order to reduce the risk ?

Q: Hi,

I’m a real estate investor and I love monthly distributions—HMAX and UMAX felt a lot like collecting rent. However, after realizing a significant portion of their payouts is ROC, I’m exploring alternatives that offer high dividends, low ROC, DRIP eligibility, and potential capital appreciation.

My horizon is 20+ years. Could you suggest 2–3 ETF ideas in Financials and Utilities that fit this profile in the Canadian market ideally or global.

Thanks,

Q: Hi 5i Team,

I'm interested in your views of buying something like UMAX using a margin account. It seems like the math works out provided a particular financial institution has a reasonable margin rate. I'm wondering if there's an angle I'm missing here. If not, is UMAX a good option for this idea? Or something else? I need more utilities and industrials in my portfolio so this would also help add to these.

Thanks as always for this wonderful service!
Lisa

Q: One of these will have to go as I need the funds. Which one, or should I just decrease each one. Thanks and greetings. Peter.

Q: Hi, what is your preference in order of these ETFs UMAX, ZWU, ZWC or is there other covered calls that you prefer. Please place in preference order. Also in which account type would each be best suited for including your picks.
Thank you

Q: I am relooking at the Fixed Income portion of my portfolio. The bulk is bond funds, but it also includes a few GIC’s and a HISA. But what about Preferred Shares, EIT, FIE, TXF, and UMAX, all of which I hold STRICKLY for their distributions? I am currently grouping them in with my dividend stocks but maybe they should be included in Fixed Income? EIT and FIE have paid out the same distribution for ten plus years. Thanks.

Q: Hi. would like to know in what account (RRSP,TFSA,NON-REGISTERED) would be best suited for these ETFs and your best to less favored in order for each account type please. ZWB, HCAL, ZWK, ZWE, ZPW, UMAX, HYLD, HDIV, HDIF, ENCC. Thank you

Q: Would I be correct in concluding that Trump's on again off again tariffs are good for covered call ETF's ? When he announces a tariff the market takes a dive. When he backs off the market rises ..... Under those conditions can not the call writers charge a higher premium ? I've noticed GDXY yielding 43% was at 52.9% the previous month. And SLVO is yielding 23.2% . Even the US treasury ETF HPYT is yielding 20% .....Even boring old UMAX a utility covered call ETF is yielding a hair under 16% ..... Do you see a relationship between the amount of the premiums covered call ETF's can get to " Yeah I'm going to tariff the snot out of you " to " Nah, i was just kidding " ..... market swings ?
Basically I'm wondering if Trump is the perfect storm for options .....

Q: I target Utilities holdings at 8-10%. Is there enough difference to hold both ZWU and UMAX as my only Utilities holdings?

Thank You

Q: As a retired mainly income investor am I okay to keep holding these ETFs in the current market?

Q: Thinking about Martin’s question ( March 19) and your response, specifically on ROC. I own UMAX in a RRIF. I Look at its 14% yield as more than enough to cover the approximately 6% ( and rising) mandatory withdrawal, thus not negatively affecting my cash flow. I also see the ROC as lowering my unit price and thus the mandatory withdrawal amount. Is my thinking right on this ? Thanks. Derek.

Q: Hello, looking at UMAX, the price went from 16$ to 14$ in less than 2 years. Is it because the NAV is going down because of the dynamics of covered calls? Sould we expect a steady price erosion for the foreseeable future? It’s nice to have 13+% annual distribution but if we have a corresponding capital loss, I am not sure it makes sense. Can this ever be a long term hold? Thanks.

Q: I am an 80 year old income investor with some growth. I have $20,000 to employ. The above is a list of my losers out of 50 winners in a portfolio of mostly the Income Portfolio plus 15 yield maximizer ETF's like UMAX. Should I:
1. wait for your monthly advice before acting
2. distribute evenly accross the losers
3. add to the winners
Any other suggestions would be appreciated.
Please take as many credits as needed.
Thank you

Q: Thanks for your advice on greater than 10% covered call ETF's in a Trump tariff world .... Of the ones you { and the one I chose HPYT } I am leaning toward a combination of HBND and HPYT for bonds. UMAX for a non volatile stock ETF, and XYLD for US exposure .....

However I am not well versed on bonds . Could you explain the differences between the two ETF's ? I have noticed that they peaked in mid September and declined since. HPYT has declined by 10.65% and HBND by 12.66% ..... What market conditions account for the price action between September and now ? I have no idea what bond durations are or what the significance of a " long " bond is but I am curious why HBND has had the bigger decline of the two ? ..... If HPYT is the less volatile of the two I'm inclined to go for the juicier dividend ..... Please explain the differences between the two ETF's and what circumstances will effect one over the other ? ..... I'm inclined to make my bond ETF purchases now and my stock ETF purchases after the tariff announcements . Would you endorse this strategy ?

Also UMAX isn't really a utility ETF . It is Communication Services 23.2%, Pipelines 22.0%, Industrials 23.6%, and, Utilities 31.2% ..... Is this something I should consider ? Or do you still put it in a defensive category with a minimum of volatility potential ? ......{ I like the juicy 14% dividend but unsure how 5i evaluates it in a Trump tariff world } ..... Thanks for your terrific service ......

Q: Perhaps it is dumb question time, however I am struggling to understand the reported stats for UMAX. Perhaps it is an obvious answer I am missing.

As of Jan 21, 2025 the Hamilton ETF's web site says UMAX is yielding 14.67%. Just below that it shows "Total Returns (incl. Dividends)" of -4.53 for 1 month to 4.18% since inception. How is this possible without eroding the NAV (or a significant stock value loss, which I do not see based on stocks in the ETF). Scratching my head to see how this math works, as I was considering this ETF for yield in a LIF.

Thanks

Dave

Q: I have another question on these covered call style funds. If the underlying stock rises and the 'at the money' option is exercised and the stock is sold, do the funds have to rebuy equivalent stock?

Or is part of the risk profile that they may be paying out some of the increase in NAV as monthly dividends and the NAV will then decrease over time (or at least the # of shares will decrease).

Q: Love what you do.
Can you compare these two ETF's for income i'm setting up a portfolio for my wife

Q: Can you go over your thoughts (other than sector differences) between these 2 types of products. I know they both use covered calls to generate additional income and that one is a split share.

Would a product like umax typically keep its payments at some level more consistently (as there is no preferred share to protect)? Is the upside (downside) potential higher on the split?

That is what I am thinking are the main differences but wondering if there are any other differences in how you see them.

If one was lookig at a swap from FTN to umax to keep a similar yield and lower leverage risk is that a reasonable view?

Q: Please advise if HAMILTON covered call ETF (QMAX, EMAX and others) eligible for the Canadian dividend tax credit.

Thanks for the great service