AlphaPro offers enhanced income equity ETF

AlphaPro Management has announced the launch of a new exchange traded fund that employs a covered-call strategy on a portfolio of 30 of Canada’s largest stocks. The Horizons AlphaPro Enhanced Income Equity ETF began trading today on the TSX.

The ETF manager, Eden Rahim, vice-president and portfolio manager with JovInvestment Management, will write primarily near-term, out-of-the money covered calls on each of the 30 stocks.

“Historically, a covered call writing strategy has offered a much less volatile return profile than the underlying basket of stocks and tends to outperform in bear market or moderate return cycles,” Rahim says. “With the stock market coming off its biggest bull market of the last 70 years, we think this strategy is well-positioned to outperform the broader stock market if we experience more modest returns going forward.”

It is anticipated that the Enhanced Income Equity ETF will make monthly distributions of dividend and call option income to its unitholders. The call option premiums are anticipated to be treated as capital gains income, while the dividends will be eligible for the Canadian dividend tax credit.

“We’re excited to be working with Eden once again. He’s a recognized leader in options trading in Canada and has done a terrific job managing the options writing for the Horizons Gold Yield Fund,” said Ken McCord, president of AlphaPro.

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