Q: Does this etf qualify for the Canadian dividend tax credit in a non registered account? If no, how is the dividend taxed? Is there a US 15 per cent with holding tax ? Thanks for the information.
Q: When I look at the yield on TXF I see it's over 8%. Is that correct? I know you say it won't participate in the upside of a bull market due to the covered call aspect but what will the yield do in a bull market? What about in a flat or declining market? Thanks!
Q: My sons who are in their 20's currently hold TXF in their TFSA's. Do you think OTEX would be a better fit in a TFSA as they will not need these funds for a very long period.
Q: I hold both ZWH and TXF - both "covered calls". I would like to switch out of "covered call". Do you know the equivalent ETF for these two that have no "covered call"?
Q: Hi Peter:
Season greetings to you and your team.
I would like your opinion on the trade(s) I was thinking about.
1) Sell full positions in POW and NFI.
I've had POW for 5 years and it has done nothing during that time except go down about 20%. However, I also think that at $24.00 it has potentially hit a bottom support number. I would be happy collecting the nice dividend it pays.
I also think based on your recent answers to questions that NFI has potential going forward.
2) If I sold POW and NFI, I would add to the positions that I already have of the other companies that are mentioned.
I'm well diversified and this would not interfere with my sector or geographical weightings or the amount of dividends I am receiving.
I think both scenarios have their positive attributes and would appreciate your thoughts. Do the trade or remain the course.
Thank you very much for your valued opinion.
The Info Tech component of equities in all our accounts is 16.2%. The following stocks and ETFs are held, followed by their weightings:
CSU 7.1%
ENGH 1.4%
KXS 2.2%
OTEX 2.3%
SYZ 1.0 %
TXF 1.9%
XIT 0.3% (used to put small amounts of cash since there's no commission with iTrade)
Would it be prudent to trim CSU, and if so, to what level?
What is your opinion of the other holdings, and are their weightings appropriate?
Are the Info Tech holdings too high a percentage of the overall portfolio?
Thanks in advance for your valuable guidance. Please deduct as many credits as you deem necessary.
Perhaps you could shed some some light on this ETF, as I believe there's a serious pitfall with the product. I sent First Asset an email yesterday, wondering about the so-called "reinvestment" that was "paid" on Dec. 28, 2017. I refer to it as 'so-called' because this $1.63 per share "reinvestment" does not give you cash, nor does it increase your number of shares! In other words, it appears to do nothing for me.
Here's the email I sent First Asset:
Hello,
I purchased 1395 shares of TXF on July 21, 2017. I see that on Dec. 28, 2017, the fund "reinvested" $1.63 per share. This would, in my case, be an amount of 1395 X 1.63 = $2273.85.
My broker, Scotia iTrade, increased the adjusted cost base (book value) of this fund, so I now show a slight loss when not considering the cash distributions received on Oct. 4, 2017, Jan. 4, 2018, and Mar. 29, 2018.
Here are my questions:
Should I see the amount of $2273.85 on the statement from my broker?
If I were to sell my shares of TXF today ($16.69 at this moment), would I receive 1395 X 16.69 = $23282.55?
What happened to the "reinvested" amount of $2273.85?
I look forward to an explanation of the above questions.
Here's the response from First Asset:
Hi Jerry,
The $1.63/unit amount is a non-cash distribution that was reinvested in the fund, which is why you see an increase in the Adjusted Cost Base. To answer your questions:
The amount of the distribution should be reflected on your statement but only as an increase to your Adjusted Cost Base. It wouldn’t increase the amount of units or the market value of your position in TXF.
If you were to sell your shares based on a unit price of $16.69 you would receive approximatively (1,395 x 16.69) – Adjusted Cost Base (including the $2,273.85) minus any other fees your broker my charge you.
The amount of $2,273.85 has been added to your Adjusted Cost Base.
I realize that 5i doesn't really care much for the covered-call aspect of TXF, but I was prepared to live with that. However, I certainly didn't expect the ACB (book value) to increase by the amount of this non-cash distribution! How does this help the investor? Am I correct in my assessment of TXF?
What would you replace TXF with to stay in the same sector, and one where the "reinvestment"is actually paid to the investor?
Thanks in advance for your guidance. I realize that this is a long and detailed question and your answer would be helpful to others. Please deduct as many question credits as you deem necessary.
Q: Grateful for your views on TXF. The dividend looks very interesting. How does it compare to fdn-n (First Trust DJ internet) ? Would you recommend it for an aggressive investor ? Finally, why is it not rated by Morningstar altough it exists since 2011 ?
Q: Hi,
Just a thought for an ETF for Raymond (Nov. 23/17), who asked about a canadian option for FANG stocks, TXF(First Asset Tech Giants) has treated me very well, so it may be of interest to him.
Cheers, Chris
I'm a bit confused with your answer to Florence about TXF. Your answer said "This one overlays 75% of the portfolio with call options......".
However, according to the First Asset website: "Distributions are paid quarterly and no more than 25% of the portfolio's securities will have call options written upon them at any given time".
If no more than 25% of the portfolio have call options, doesn't this strategy mean that an investor wouldn't be giving up as much as your answer indicates? Am I missing something here?
Q: Thanks for your great service. In your response to Raj this morning, you state that "The ETF TXF has been liquidated (closed)." I currently hold this and it trades daily albeit at low volumes. Is there something happening to this ETF that I don't know about?