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  5. BOND: What am I missing here? [Evolve Enhanced Yield Bond Fund]
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Investment Q&A

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Q: What am I missing here? This is a bond fund with an almost 12% payout? Is this something you can put $100k in and get $12k paid out every year forever? I get that it does covered calls but it just seems too easy. It completely trashes the TSX yearly returns with far less risk?
Asked by John on March 20, 2025
5i Research Answer:

BOND is up 4.24% this year, and indicated yield is 11.97%. The covered calls enhance income, and lower rates can help the ETF's bond portfolio. But note that 76% of the distribution is considered return of capital (ROC). This potentially could result in a decaying net asset value over time. Over a one year period, the fund is up 1.15% but does not have a longer history than that. We are comfortable with the fund, certainly, but it is important to understand the difference between pure interest and ROC.