Opinions
Larry Berman CFA, CMT, CTA
iShares Cdn Financial Monthly Income ETF
FIE-T
DON'T BUY
Jun 13, 2016
$6.620
Stock price when the opinion was issued
E.T.F.'s
It's the ideal tool to help you make quicker, more informed decisions for
managing and tracking your investments.
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DON'T BUY
It's like XTR--the yield you seem to get is not what you're enirely getting. He'd rather do straight bond ETF or covered call one.
E.T.F.'s
HOLD
Fixed dividend. It has a huge exposure to corporate bonds, preferred shares and a lot of the banks and insurance companies. There will be some dividend impairment for 6 months or a year. He would stick with it. If dividends get cut by the companies in it, then the ETF's dividend will probably be cut.
E.T.F.'s
COMMENT
There are two elements to covered call strategies. There is the underlying stocks, and then the option premium. Volatility will continue to be high for the next couple years. Premiums will remain elevated. FIE pays back a part of your money back. There are a couple different elements to consider.
E.T.F.'s
COMMENT
A financial, dividend paying strategy. Has banks, insurance companies and dividend payers. A concentrated investment in financials so keep this in mind for allocation. Around 6% yield. However, underlying is not earning 6%, so there is a return of capital. A tax effective way to get exposure to financials.
E.T.F.'s
Likes this as a diversifier. You have about 22% of preferreds, 11% of corporate bonds, all of the banks and a lot of financials, some of the big dividend payers in Canada. It isn’t diversified much beyond financials, so there is a lot of sector concentration. If you are going to put this in your portfolio, and it is 10%-20%, he would be good with that. Make it a core holding. Valuation-wise right now, he doesn’t like financials. Thinks they underperform for the next year or 2.