Opinions
Mike Philbrick
First Asset Energy Giants Cov Call ETF Hgd
NXF-T
DON'T BUY
Sep 05, 2019
Stock price when the opinion was issued
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Given that the energy space is volatile, but not overly sold, the covered call strategies have looked pretty attractive over the last couple of years. Generally speaking, he is not an energy fan or investor. However, when his arm gets twisted by a TSX that roars forward, and he is not playing that game, he tends to go in and rent that ETF space.
Covered call gives you a boost to income, even more so because the space is volatile. Yield is about 8.5%. If you compare it to XEG, the total return over 3 years is 157%, compared to 94% for NXF. Total return should be your focus, unless you really need the income. MER is usually higher with covered calls.
There's value in energy going forward, but no near-term catalyst for it to move higher anytime soon.