Covered Call ETF’s

By: ispeculatornew
Date posted: 06.16.2011 (5:00 am) | Write a Comment  (0 Comments)

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As many of you know, IntelligentSpeculator is part of a network of websites that includes many different types of properties. Some are blogs (such as this one), we also have non-finance related websites and also smaller “niche” websites. One of those has just been launched, it is an introduction to Covered Call ETF’s.

What Are Covered Call ETF’s?

Obviously, I recommend that you visit for more detailed information but in short these are similar to standard equity indexes such as XIU in Canada or SPY in the US. One difference however is that these funds sell call options in order to generate additional income for their investors.

Does It Work?

One reason why so much attention has been geared towards these ETF’s recently has been the launch by Alphapro of 4 such Covered Call ETF’s including HEX which is a Covered Call on the S&P TSX60, Canada’s main index. How well is the strategy working? So far, the ETF is paying out a dividend yield of nearly 15%. Only time will tell if the fund managers will able to keep things up but I do think that demand for these products is likely to stick. Why? Because dividend/income investing has been gaining a lot of popularity in recent months and Covered Call ETF’s are built specifically for these types of investors.

What Are The Differences With Standard Index ETF’s?

#1-More income/dividends
#2-Less upside if the market increases quickly

Have you tried any of these? If so, what are your thoughts so far?

Find out more about Covered Call ETF’s at

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