Stock price when the opinion was issued
HMAX uses 'at the money' call options to enhance income. This, plus dividends, and capital gains, allows it to pay high income. Note the distribution rate does vary, and has declined a bit since inception. The fund could lag in a sector rally, and will still likely decline in a market correction. It is also entirely exposed to the financial sector. But for investors who understand covered call funds, and want enhanced income, we would be fine owning it.
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ZWU is far more interest-rate sensitive, as it focuses on utility companies. Generally as interest rates fall, utilities do better. HMAX is financial services, insurance, lifecos. Falling rates not necessarily good for them, because they're more sensitive to interest rate cuts for a slowing economy with prospects of a harder landing.
So, if rates are coming down due to an economic slowdown (as he believes), then ZWU will probably outperform HMAX in the short run.
Good. Has a covered call overlay, holding financial services including lifecos, with an options strategy. It may have a little leverage, and a little more volatility but also a little more of a return. That said, if you're bullish on the underlying space, own the individual names for the long term. If you're short term or seek higher yields, then these products will generate higher, tax-efficient income, but will underperform long term. A rule of thumb.
Both hold financials,but ZWB uses covered calls. HMAX has performed a little better and offers a little more yield. ZWB writes only half the securities, so it takes in less yield, but gets more upside capture. The price return is 11% on ZWB in the past year vs. HMAX's 6%, but the total return is close. However, ZWB pays you you more of a yield. nearly 7%, but gives less growth.
Caught a lot of attention from DIY investors who are sorting by yield. Has amongst the highest yields ever seen, ~14-15%. When you see a double-digit yield, ask where it's coming from. Here, it's through very aggressive covered call writing. Gives you high yield today, but very little growth going forward; a tradeoff. Looking at total return over the long term, almost always underperform ETFs that don't use covered calls.
Best way to use this one is in concert with other forms of investment that will participate in a market rise, such as ZEB.
It is fine for financials and provides a little insulation. He wouldn't go any higher than 10% on a single ETF in a sector.