BMO Covered Call Utilities ETF (ZWU.TO)

This is a good holding. They are writing Call options against utilities that are inside the ETF. What you are really capturing here are option premiums, and he thinks they write on 40% of the underlying stocks. Generally, utilities are not a growth sector, but they pay a very good dividend and they are a defensive sector. If you are writing covered calls on that, you are increasing the dividend and capping the upside. Not a bad thing in an area that doesn’t have a lot of upside. An excellent strategy if you are inside a LIF. This is a strategy that you could dovetail with other things like a REIT.

The yield gives you part of your capital back. But also when trades create a need to distribute capital appreciation, you get some back.

ZWU-T vs. ZUT-T. ZUT-T is equal weight utilities in Canada. ZWU-T is 80% Canada and utilities also include pipelines and telcos and it has a covered call overlay. He prefers this because it is more diversified and has the covered call overlay.

(A trading vehicle or a Hold?) Feels ETF’s are more of a Hold than a Trade. This one has done quite well and has produced some pretty good yields. Compared to the rest of the market, it hasn’t done too badly. It has a Covered Call which essentially means that when you hold a portfolio of utilities, you also write Calls on them. The problem you might have is if we suddenly have a run on the utilities, which we are having right now. Your stocks then get called away causing you to miss the upside. He hasn’t been inclined to get into Covered Call ETF’s.

He loves this holding. It is very high yielding. You have some of the best and highest yielding companies and the covered call overlay adds to the yield. It is not a bond replacement, but fits into a lot of portfolios. It looks attractive for yield players out there.

Consists of good dividend paying companies with a covered call overlay. It is pushing an 8% yield. It has been a bad performer because pipelines have performed poorly. It is a diversified way to get income from Canada in a tax efficient way. There will be volatility. It is not a fixed income replacement.

This holds a basket of utilities mainly as well as some of the telecoms. It applies a covered call strategy to extract some additional income. His issue with the utility space is that if and when interest rates begin to move upwards, these dividend paying type of stocks will be under pressure to a certain extent. Telecoms have done quite well, but he is not a big fan of utilities.

He has looked at this Covered Call, but the problem is that it is utilities. It covers pipelines, telcos as well as some of the gas utilities. A bit too broad for him. You have a situation here where the telcos are going up and the pipelines are going down. As an investor he would rather pick his spots, i.e. invest directly in the pipelines or the telcos, rather than having them all mixed into one ETF.

The issue with utilities is always interest rates. He doesn’t see the rates going up significantly in the next little while, and this is a very nice overlay on top of the utilities, which are generally pretty sluggish. Likes the 5.5% yield on this.

Utilities, pipelines, telcos, big dividend players with a covered call overlay. Quite an interest rate sensitive sector. This is a time to look at this. If you are a total return investor, this is not necessarily going to give you a lot of growth. If you are a yield investor, it is a great, great holding for a nice yield and lower volatility in the broader markets.

He has a full position. It is a great holding. The covered call gives you an enhanced yield. He would look to sell if it went over $15.

He likes this. Remember that utilities are a little bit like REITs and are interest sensitive. However on this one the indicated yield was about 6% including covered calls and dividends. He would be a little bit on the cautionary side when interest rates start to move, but in the interim buy it.

Caller was at 10%. He feels this is okay for an ETF and so the caller should not add to or reduce his position.

Covered Call Utilities. Loves it as part of a holding. Has a 6-7% position. Utilities, telcos and pipelines, 20% in the US. Not without risk. It is interest rate sensitive. 5.5-6% yield.

Has been a good name to own. The Covered Call nature helps mitigate an “interest rate hike” risk. The only concern that he has is that it is about 35% energy, and that is always going to cause a little bit of grief. Believes this has both Canadian and US exposure, and this is probably a good entry point.