Q: Very curious as too why you seem to support HDIV. Looking at the sell-off window between Jul 31 and Aug 7 this year, HDIV declined approx 40% more than the avg decline of the TSX, S&P500 and DOW. I fully understand at/out of money risk, but it seem leverage, which HDIV uses, is not great in market downturns. I know the window for this analysis is narrow, however it seems to show the risk of leveraged funds.
5i Research Answer:
Leverage certainly works both ways. We consider HDIV a decent-enough covered call income fund for those who understand the process and are looking for income. It is a multi-sector fund unlike many other specialized offerings. It will certainly move more than the market at times due to its leverage. But three-year annualized return is 9.79%, and for income investors we think most would find that attractive.