Q: Love what you do.
Can you compare these two ETF's for income i'm setting up a portfolio for my wife
Can you compare these two ETF's for income i'm setting up a portfolio for my wife
5i Research Answer:
HDIF is a diversified monthly income ETF; $432M assets, fees 0.15%, indicated yield 9.75%, one year return (it has a short history) + 30.75%. It is 86% invested in the US. It uses 1.25 leveage and covered calls to enhance income.
UMAX is $504M, fees 0.80%, yield 13.91%, one year 12.75%. It does not use leverage and focuses exclusively on the utility sector. It sells covered calls on 50% of the portfolio, using at-the-money options for higher income (but less capital gains upside potential). Of the two, we would prefer HDIF. While it does use leverage, we think this is offset by the fact that its portfolio is more diversified than UMAX. Leverage of course enhances returns in good markets, as has been seen this year.