Q: What do you think of this fund? Good. bad?
5i Research Answer:
USCL is an S&P 500 fund that uses 1.25 leverage and sells covered calls to enhance income. For this category, we would considering it fine. It has done well (up 36.9% this year) and offers a 11.6% yield currently. Investors however need to understand that leverage works both ways and losses can be amplified. Also, in a big market decline covered call income will only provide limited cushioning. This fund could still decline a lot under the wrong market conditions.