John DeGoeyHAP Enhanced Income Equity ETFHEX.TOTOP PICKOct 05, 2011

This is an enhanced income covered call Canadian ETF. It is a yield vehicle and not a growth strategy. In up trending markets this will underperform the market due to the covered calls being sold. It is better for steady income. MER is 0.82% Yield 5.7%.

(A Top Pick July 11/17 - Up 0.6%) Basically it is a covered call on the TSX. He likes the product, but it is the Canadian market that he is not so thrilled about.

It is a covered call ETF that is actively managed. It holds a basket of stocks. It is into typically Canadian exposure. It is difficult to judge whether it is going to outperform. It has a high yield (just over 5.2%). If you want this then it is a good investment.

He likes this. A little more diversified than some of the Bank of Montréal (BMO-T) products, which are primarily the banks.

Basically 30% Banks, 20% energy, 10% utilities, etc. They have a whole bunch of stocks they do covered calls on. You are getting a good 5%-5.25% yield. It is all capital gains and dividends, not income.

Basically a TSX based ETF. 17% energy weighted. It is really a question of whether you think it is time to be stepping back into the Canadian market. There is an argument for it, but he would want to wait a few days to see what shakes out. These are pretty critical times right now.

This is a covered call strategy. He likes covered calls and has no problem in dealing with this one. Thinks it has a lot of bank stocks which he likes.

He is not exactly sure what they are doing in this. Assumes it is a covered call fund and they are selling Covered Calls against a basket of equities that likely matchup with the TSX 60. His issue is that their prospectus basically says they are going to write covered calls against all of the stocks, all of the positions. If so, this puts the manager into an impossible position. If the stock rises, you are losing it. If it declines, you are writing a Call on a lower price, and you are never going to be able to get back to where you were. When you have a basket of stocks, you are compounding the effect.

TSX 60 covered call overlay. Monthly distributions. In a sideways to down market you will outperform XIU-T, for example. You could trade these two off each other. For the next 3-5 months Canada will underperform the world markets.

Covered call strategy. Capital distribution could be larger than dividend. Diversified and covered call so he likes that kind of fund.

It had a lot of exposure to RIM so it had a big drag relative to the TSX. The covered call strategy has been working, however.

One thing you have to remember with Horizon’s products is that they are swapped based. But he really doesn’t see this is a problem. He avoids because some of his clients perceive them as having risk. Nothing wrong with this product.

(A Top Pick Oct 5/11. Up 6.12%.) He is liking it enough that he is holding it, but is not buying it for clients as a new position. Not as compelled as he was a year ago regarding covered call writing strategy. Hasn’t worked as well as he would like. If you own, continue holding unless you see another product that will work better for you.

There are a lot of Covered Call ETFs out there that enhance income and give you a lot more money. Haven’t been doing all that well and he thinks it is because it is how the Covered Call works. For instance, he is going to buy a stock for $10 and Sell a Call on it and bring in some money. Calls work wonderfully in a flat or slightly trending market, otherwise he is not big on Call Options. Feels there is more money to be made by strictly buying equities because a Call Option is going to limit your upside.

Caller is thinking of switching from this to S&P 500 Inverse ETF (HIU-T). The problem is that when people are looking at the yield being offered, it is often showing 6%-7% but you have to remember that as a covered call and is predicated on the underlying stock. If they are showing volatility, you may be getting your percent but losing on your capital. Doesn’t think it is a good idea to Short and he would continue holding this one.