Q: TSX:QQCL (Global X Enhanced Nasdaq-100 Covered Call ETF)
Another pro's & con's question to buy or not?
The chart looks good on it.
Thank you.
Another pro's & con's question to buy or not?
The chart looks good on it.
Thank you.
5i Research Answer:
QQCL uses 1.25X leverage and call options to enhance income. Leverage is a pro (when it works) as well as a con (when it doesn't). The enhanced income is fine for investors who want more income, but the covered call strategy can result in lower overall returns in a sector rally. The call premium will provide a small cushion of safety in a decline, but in a big correction this fund will still go down a lot, as it is 100% equity based, plus leverage. Investors need to understand the risks. We like the tech sector, and would be fine buying this for investors looking for more income and who are willing to give up some upside potential for the income.