Q: Please explain the difference between these put option funds, and which one you prefer.
Thank you
Thank you
5i Research Answer:
ZPW is a 'put write' ETF where it mostly holds cash, and then sells put options on US stocks. If the underlying stocks decline, it has to buy the stocks but gets to keep the options premiums. Fees are 0.71%, assets $73M, one-year return 15.84%, indicated yield 9.36%. ZPH is essentially identical, but hedged to the Canadian dollar. The hedge costs money, so fees are 0.73%. The hedge also means it does not benefit from a drop in the C$. Thus, since the C$ has dropped in the past year, one year performance is less, at 13.20%. We prefer ZPW, seeing currency as another form of diversification.