Hamilton ETF Outperforms Benchmark by 22% in Bullish Market
The Hamilton Enhanced Multi-Sector Covered Call ETF (TSX:HDIV:CA) has shown impressive performance, outperforming its benchmark by approximately 22% in a generally bullish market. This success can be attributed to active management and strategic option use, even with a 25% leverage factor.
HDIV:CA's strategy involves actively selecting underlying assets and writing options, providing diversification and a long-term bullish outlook. The ETF holds a diversified portfolio of covered call ETFs, mirroring the S&P/TSX 60's sector mix, with a modest 25% cash leverage. This approach allows for income generation and potential underlying gains, with strikes usually at the money.
Despite a volatile profile, HDIV:CA's underlying diversification and bullish multi-sector view help smooth out the ride. The fund's expenses are around 1%, with a conservative yield of approximately 10-11% that doesn't erode the net asset value (NAV). However, investors should be aware of leverage risks and potential deeper losses for extended periods, especially with medium-term investment horizons.
HDIV:CA is a compelling choice for investors seeking long-term income vehicles with growth potential. Its active management, strategic option use, and diversification make it an attractive option for those willing to navigate potential volatility and leverage risks.
