Q: Now that the PAYF ETF has been around for a number of years, curious what you think of it.
5i Research Answer:
PAYF is an enhanced income ETF. It uses a cash covered put strategy where the fund sells put options on its portfolio to drive enhanced income. It does not use leverage, and cash covered puts make up 75.5% of its portfolio while the remaining 24.5% is held in equities. The yield is high at 8.6% currently, and the fund targets a yield above 9%. Since inception it has generated a total return of nearly 46% while doing a good job mitigating volatility. We are fine with the strategy and performance but we have concerns on liquidity as it only has $40.5M in assets under management and charges a high fee at 0.75%.