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Constellation Software Inc. (CSU)
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Lumina Gold Corp. (LUM)
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Topicus.com Inc. (TOI)
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Global X Enhanced Equal Weight Canadian Banks Covered Call ETF (BKCL)
Q: Hello! I invested some of my young son's money into bkcl, thinking that Canadian banks are reliable and it will grow over time. The fees for the ETF are high, but it pays about 12% dividend monthly. It actually pays more, but I have deductions as I don't live in Canada. What is your opinion about this kind of etf, ie based on Canadian banks, high management fee but very high regular dividend? Thank you!
5i Research Answer:
BKCL's MER as listed on its site is 2.16%, so certainly one of the highest for ETFs. It uses both covered calls AND 25% leverage to enhance returns. The leverage of course adds additional risks and needs to be understood by buyers. But we are comfortable with it for those that want higher income and understand leverage and covered call funds. One-year return of 39.06% is certainly impressive (it has a short history so longer timeframe not available). We would be comfortable owning this for an investor seeking income. With a 'young' investor we think some growth exposure with non-income stocks should also be present.