BMO Covered Call Utilities ETF T.ZWU

Alternate Symbol(s): BMMVF

The ETF seeks to provide exposure to the performance of a portfolio of utilities companies to generate income and to provide long-term capital appreciation. To achieve investment objective the ETF will primarily invest in and hold the equity securities of Canadian companies widely recognized as utilities companies, which may also include telecommunication and pipeline companies, and use derivative instruments to hedge U.S. dollar securities back to the Canadian dollar. Depending on market volatility and other factors, the ETF will write covered call options on these securities. Under such call options, the ETF will sell to the buyer of the option, for a premium, either a right to buy the security from the ETF at an exercise price or, if the option is cash settled, the right to a payment from the ETF equal to the difference between the value of the security and the exercise price.

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BMO Covered Call Utilities ETF > In A Market That Trades Sideways This Is A Good Option

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Post by DeanEdmontonon Dec 22, 2022 11:30am

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Post# 35187188

In A Market That Trades Sideways This Is A Good Option

Because of the covered call strategy to boost the monthly payout, you aren't going to make any SP appreciation in a rapidly rising market. However, if you need the dividend yield to live on, this is still better than a GIC at todays rates. Principal value of a GIC does not go up or down and it yields 5%. This yields 8%. Not hard to see the upside. That and dividends get treated a whole lot more favourably than interest income, so to the extent part of the payout is eligible dividends that is also a plus.

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