Q: I hold a significant position of ZWU ( less ZUT) for stability of the sector during crisis and stable dividends .ZWU holds around 40% of US stocks .In a non registered account, considering various factors: 1) NAV of ZWU is normally dropping over time 2) dividends are higher 3) no dividend tax credit for the US proportion 4) having a US proportion offers some kind of diversification : Alltogether would you consider one of those ETF a better choice for value + dividends? if not ,any ideal proportion of the 2 ? Many thanks ,JY
5i Research Answer:
We think the decision comes down to whether an investor wants the covered call feature. The covered calls help with outsized yield but it does cap your upside when things move higher and we think the answer here is largely personal preference. Regardless, we think both are fine and offer a bit of a defensive posture in a portfolio.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in ZWU.