Q: If you wanted to replace CVD in a portfolio that resembles the income portfolio, would you reinvest in the other current securities or would you replace it with another security? Secondly, what would would you consider replacing it with that would give you better tax treatment, for one who is relying on the portfolio almost entirely for retirement income?
5i Research Answer:
We would be comfortable moving to the other securities vs adding another. The second question is very difficult, as the best way to reduce tax impact is to own a fund that does not pay dividends, but this contradicts the second goal of getting retirement income. ZWC is one possibilty, as call option premium is treated as capital gains, so there is high income but not all is taxed at the highes rate.