Q: Is the reason this ETF has declined by approximately 8% this year because of its weak sectors of the rails and telecommunications or is there something fundamentally wrong with the structure of the ETF ? I hold it in my RRIF where yield is important to me. Thanks. Derek.

Q: Hello!
Now that I’ve reached the age of RRIF withdrawals, I’m looking more closely at income and therefore at covered-call ETFs.
I understand that these instruments don’t fully share in the upsides, but the income of ETFs like EIT, TXF and ZWU is pretty solid.
I’ve also been looking at UMAX its unbelievable 14% yield, but I also see that the unit price has declined quite dramatically over the last few years.
So questions are, how do you feel about these ETFs for income? And if you’re okay with them, which would you recommend?
Thanks for all your help
Michael

Q: This question will likely apply to any of the covered call funds. In your answer to Greg on Oct. 21, you stated that the yield on this fund was 14.02% but the one-year return was only 4.15%. The fund cost approx $13.06 a year ago and now sells for approx $13.70, which means that your capital has grown by 4.15%. But over that year, dividends totalling $1.92 per unit were received (for a yield of 14%). Doesn't that make the total return on this fund closer to 18%? I assumed that if the unit was worth the same or more than I paid for it in a year, the monthly dividend would not result in any decay and that this amount should be added to the increased value of my purchase. If this were a single stock paying 5% and the stock increased 5% isn't my total return 10%? Is a covered call fund calculated differently?

Appreciate your insight.

Paul F..