February 22, 2023
Investors face many challenges in the current market, including global uncertainty and market volatility. However, it’s important to remember that volatility is a normal and healthy part of the investment process. In some cases, volatility can present new opportunities for investors.
If you’re looking for ways to benefit from persistent volatility, you might consider a covered call strategy. A covered call is a financial strategy that can generate income while lowering downside risk and providing attractive returns. It can also offer targeted exposure to a particular sector, such as utilities.
Utilities include basic services like electricity, gas and water and are used by nearly every home and business. For most people, utilities are considered an essential service needed to survive. As a result, the demand for utilities and utility services tends to be inelastic. It doesn’t matter if there’s an economic downturn or an impending recession, people will continue to take showers and heat their homes. This makes investing in utilities and utility services an attractive and income generating option.
A covered call ETF strategy can offer investors a number of benefits, including:
Investing in a covered call ETF that targets utilities and utility services comes with some additional benefits, including:
CI Utilities Giants Covered Call ETF (CUTL) offers investors an opportunity to take advantage of enduring volatility.
CUTL invests in an equally weighted portfolio of 20 or more of the largest utilities companies listed on a North American stock exchange with a covered-call option overlay. Call options are written on up to approximately 25% of the underlying portfolio. This leaves the vast majority of the portfolio uncovered, allowing investors to capitalize on the appreciation of the underlying securities in the portfolio.
In a volatile environment, covered call strategies offer a compelling solution by providing targeted exposure, tax-efficient income and downside protection. Investing in CI Utilities Giants Covered Call ETF (CUTL) provides several added benefits, thanks to the defensive nature of utilities and their reliable and income generating potential. Visit our ETF landing page to learn more about our covered call ETF solutions as well as our other solutions.
Commissions, management fees and expenses all may be associated with an investment in exchange-traded funds (ETFs). You will usually pay brokerage fees to your dealer if you purchase or sell units of an ETF on recognized Canadian exchanges. If the units are purchased or sold on these Canadian exchanges, investors may pay more than the current net asset value when buying units of the ETF and may receive less than the current net asset value when selling them. Please read the prospectus before investing. Important information about an exchange-traded fund is contained in its prospectus. ETFs are not guaranteed; their values change frequently, and past performance may not be repeated.
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