Larry Berman CFA, CMT, CTA BMO Covered Call Utilities ETF ZWU-T PARTIAL SELL Oct 21, 2024

Includes telcos likes BCE, Telus, and Rogers, as well as utilities. Still likes it a lot, has it in his global dividend strategy. He reduced exposure on recent rally, moving to ZPAY for the lower risk. Before adding, wait for it to hit the low $10s.

He feels that interest rate pressure is coming to long end of the curve. A lot of these utilities are capital intensive, so likely to see additional downside. Underweight for now; look to buy into weakness, but not today (BCE is the catalyst for today's move).

Utilities are a very low-volatility sector, so the premiums are lower compared to oil/gas. He suggests holding both this and XUT-T. Utilities are a top sector, because valuations are so reasonable (hard to find that in this market). ZWU will give you covered calls, but XUT will give you upside. So, own both, half and half.

That's a very specific question about one investor and their financial circumstances, risk tolerance, etc.

If we're going into an environment of slower economic conditions, then ZWU is likely to do a bit better. This would be due to the Canadian banks pulling back. He loves them both, great exposures. A bit concerning if all a retiree's portfolio is in just those two vehicles; there's not much diversification either within or outside of Canada.

Consider adding ZPAY, which gives you some US exposure to big banks and tech, and with a lower risk profile.

Very good yield. Just remember that the utilities sector is very vulnerable to interest rate changes. If rates go up, high regulation means they can't increase prices to consumers. Great way to earn tax-enhanced income.

He likes covered calls, but the big tradeoff is that you can give away upside. The option premium boosts the return.

You want the market moving up and down for covered calls. It is a fairly safe play but you need to keep an eye on it.

It tracks companies with stable earnings which are soft of priced like bonds. Covered calls gives a little more income. Utilities act like bonds. It has faced the rise of interest rates, but rates will ease and will benefit this sector, which is a good place to be.

Both offer similar exposure. He doesn't looked at HUTL's foreign exposure, but likes both as a strategy. They take turns outperforming each other. Even. Both are good.

They are both relatively safe or stable sectors so you could add both to your portfolio.

Remember that a GIC and dividend stock have different levels of risk. Consider preferred shares and covered call ETFs like ZWC which gives broad exposure to Canadian dividends with a covered call overlay. ZWU, too, which is an alternative to fixed income, but gives equity market risk.