Q: how safe is HDIV in a recession? It uses leverage but also has covered calls to make income.
5i Research Answer:
The fund can certainly still go down. One month return is minus 0.45%. The covered call premiums will provide ongoing income in all markets, but in a market decline they will not likely be enough to offset market losses. Leverage can make these declines worse. But, most recessions are short, and we would be too worried owning this, generally. It is diversified by sector, which helps. But investors need to keep in mind it is 125% equity focused, and this does come with risks.