RE: RE: RE: Distribution July 19%Dividends in this type of fund are primarily generated by capital gains via the fund manager. The secondary income source results from selling covered calls. This works well in a sideways market because the covered calls expire without ever being exercised. Dividend income so to date estimates 10% writing covered calls, .6% from dividends earned by the underlining stock and the rest from re-balancing ie capital gains.
Over time I believe the monthly dividend will even out. These funds (HEP, HEX, HEE, HEF) are new to the market and it may take some time for a dividend track record and investor confidence to build. I am betting that once this happens the price will rise dropping the yield to a more normal level. If not I am buying until I see a reason not too. Comments?