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  5. EMAX: These 3 new Hamilton covered call etf's seem to my untrained eye to provide a very smart blend of generous income in excess of 10% annually each as advertised plus 70% of the holdings aren't subjec... [Hamilton Energy YIELD MAXIMIZER TM ETF]
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Q: These 3 new Hamilton covered call etf's seem to my untrained eye to provide a very smart blend of generous income in excess of 10% annually each as advertised plus 70% of the holdings aren't subject to the call writing and thus are able to deliver a substantial portion of potential capital growth. The current portfolios for all three seem well chosen, solid picks. Each of these etf's has over $100 million invested rather quickly and they are likely to continue subscription growth. Newness aside, what's not to like for income plus exposure to a basket of high-grade US healthcare, financials and Cdn and US energy equities? Whatcha think? Thank you.
Asked by Ken on April 02, 2024
5i Research Answer:

We think these new Hamilton products are solid options when not considering how new they are. They are unhedged and do not use leverage which we like. The fee is high at 0.65%, but this is pretty much in line with other covered call ETFs which we are fine with. The one area that we would caution with this new line of ETFs is that they are not a pure income play. By writing calls on a smaler portion of the portfolio, investors do not get the same level of income protection as ETFs that write calls on 100% of their portfolio. Thus, in a market downturn, the potential for capital losses is higher in this style of covered call ETF versus a fully written covered call strategy. This is not necessarily a bad thing, but just an aspect of this strategy we wanted to point out. We think these new ETFs look good for investors wanting sector exposure with the enhanced income feature.  

 

 

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