Q: Hello. Could you comment on how the yield is achieved in this fund? Dividends will form part and I see leverage was mentioned in a previous answer (assuming there is a net benefit from additional yield over the cost of leverage). Does this fund also employ an options strategy? If no options strategy, am I right that a good chunk of the distribution over time has been return of capital? Secondly, could you comment on the volume/liquidity of the fund over time? I'm thinking of starting a position in this across our investment accounts but am concerned about what might be limited volume on entry or exit. Thank-you.
5i Research Answer:
Taxes vary each year, but in the last year 41% was return on capital, 46% was capital gains and the balance eligible dividends. It can and does use options. The fund has done very well in recent years after lagging for some time. Positioning seems correct for the current market. Five year annualized is now 18.99%. It lost only 3% in 2018. This year it has averaged 170,000 units traded daily (about $2.5M value). Unless one is trading a giant position, we would not see liquidity as particularly concerning.