Q: replace zwu with umax to increase income. does this increase risk? thx james
5i Research Answer:
We are fine with this although there are risks with UMAX being such a new Fund. UMAX has historically generated higher monthly income than ZWU and the yield also reflects this being about 2% higher right now. UMAX being so new does bring up concerns about if it can sustain this high yield in the long-run. But, we are comfortable with the switch for higher income. Note UMAX uses 'at the money' call options, so could lag ZWU in a sector rally. It doesn't really increase risk in any way and the higher income reduces risk marginally. But it may lag in a rally.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in ZWU.