I am thinking of adding ZPH to a diversified income focused portfolio.
In these volatile markets when would one become over-weight on this holding and what market conditions would make a person reduce their weighting?
Thanks for the Great Service!
ZPH is quite small currently, and we would prefer to see it at at least $50M before getting behind it ($27M now). We have no issues with its strategy or holdings. Indicated yield is 9.60% and YTD return 6.42%. In a Put Write ETF, put options are sold for income. If a stock held declines, the ETF has to buy that stock, but its cost base is lower because of the put option premium received. If the stock rises, or stays flat, the ETF just keeps the option premium when it expires. Fees are 0.73%, on the high side, but it is an active strategy. Generally, we focus on weightings in relation to an overall asset allocation mix. For an income focused fund, we would be OK keeping an ETF through an entire market cycle. We do like to keep single ETF exposure generally capped at 15%.