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BMO Covered Call Canadian Banks ETF (ZWB)
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Recon Capital NASDAQ-100 Covered Call ETF (QYLD)
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Hamilton Canadian Financials YIELD MAXIMIZER TM ETF (HMAX)
Q: Interested in your thoughts on this one .... Global X Russell 2000 Covered Call ETF (RYLD). What is the ROC level and any thoughts on the reason for the steady decline over the last 3 years. Also, would you consider it relatively "safe" for a retired investor ... maybe @ 5-7% of total portfolio value.
5i Research Answer:
RYLD is a covered call ETF on the Russell 2000, and this allows it to have such a high distribution yield of 12.5%. Year-to-date it has paid 93% of its distributions from RoC, and in 2023 this amount was similar at 94%. It has a good level of liquidity, but since inception it has only returned 3% annually, and while the monthly yield is high, its RoC and covered call strategy is putting a ceiling on its price.
We would prefer another covered call ETF like QYLD, HMAX, or ZWB.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in ZWB.