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  5. HPYM.U: What are the pros and cons of this etf. [Harvest Premium Yield 7-10 Year Treasury ETF]
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Q: What are the pros and cons of this etf. Lower interest rates, Trump election? Would this be better to buy the CDN or
USD version?
Asked by john on December 03, 2024
5i Research Answer:

HPYM is a covered call ETF that holds a portfolio fo mid-term duration US Treasury Bonds. Pros would be the higher yield offered through covered calls. Cons would be the capped upside due to this strategy as it is likely that the call options it has written will be increasingly excercised when rates are declining. Lower rates will help the underlying portfolio appreciate, however, this upside is less than a non-covered call bond ETF. We typically prefer the unhedged securities because it is possible that investors positively benefit from currency fluctuations.

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