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  • An In Depth Look at the New Covered Call ETFs
    I did not mention BWV in this article, but covered it in a follow-up article at:
    www.qvmgroup.com/inves...
    Jun 15 12:20 pm |Rating: 0 0 |Link to Comment |View article
  • An In Depth Look at the New Covered Call ETFs
    I wouldn't recommend worrying about the end of the term of this fund. It was launched in 2005 and will be around long after you have made any investment. If you in the fund 10 years from now, look into that question if you wish.

    I doubt that the fund will stop writing calls, because that process is why the fund exists. They would have to make changes that probably would require a shareholder vote. I can't imagine that possibility effecting the price-to-nav relationship.

    Note that covered call funds exceed the performance of the underlying index in a sideways market and in a declinging market (although they do not limit the downside), but they cap the return on the upside.

    If you have questions that are not answered by published documents, the best thing to do is to contact the sponsor. Typically, you can get the info you want "straight from the horses mouth".


    S&P 500 Covered Call Fund Inc
    800 Scudders Mill Road
    Plainsboro, NJ 08536
    P: +1 609.282.5904


    Fund web address:
    www.iqiafunds.com/fund...

    INVESTMENT OBJECTIVE
    The Fund's investment objective is to seek total returns through a covered call strategy that seeks to approximate the performance, less fees and expenses, of the CBOE S&P 500® BuyWrite
    IndexSM (the "BXM Index").


    INVESTMENT STRATEGY
    The Fund will pursue its investment objective principally through a two-part strategy. First, the Fund will invest the proceeds in all of the common stocks included in the S&P
    500® Index weighted in the same proportions as the S&P 500® Index and/or other investments that have economic characteristics similar to the securities that comprise that Index. Second, each calendar month during the term of the Fund, the Fund will write (sell) one-month call options on the S&P 500® Index ("Written Options").
    Jun 14 16:13 pm |Rating: 0 0 |Link to Comment |View article
  • An In Depth Look at the New Covered Call ETFs
    Roger,

    I reflected on your comments and decided to redraft my blog on this topic. Since my principle purpose was to review and discuss the covered call strategy, I realized from your comments that by mentioning several funds, but not all of the funds in the category (many of which are following multiple simultaneous strategies), I was diverting attention from my principle point. In that respect you were correct to say that I was off the mark.

    Consequently, I have totally rewritten my blog article to focus exclusively on BEP and BWV, which describe themselves as strict adherents to the single strategy of S&P500 BuyWrite.

    Your comment helped me focus on that point while leaving out essentially extraneous information about other funds which could be the subject of another article another time.

    Thanks.

    If you are interested, the revised blog article is at:

    www.qvmgroup.com/inves...

    Richard
    Jun 06 17:55 pm |Rating: 0 0 |Link to Comment |View article
  • An In Depth Look at the New Covered Call ETFs
    Roger,

    Picky is good. Your suggestion that I should have stated that the fund are CEFs is appropriate. I am aware that there are more funds of the type, but I wasn't trying to make an encyclopedic study of the class, but to discuss features of the class. The particular funds used were actually selected by a client who received a proposal from an advisor who chose those funds as the best choices in the class. As you often do in your own blog, I was utilizing a real situation to discuss a theoretical point. I admit to conservatism by not accepting funds as necessarily mature with 2-3 years of history. That conservatism is particularly important in my with this class which seems to cyclically outperform and underperform the underlying index. This class has done well in the last 2-3 years during a period of cyclic outperformance. Because they have "juiced" their performance relative to the BuyWrite index, I would like to see how they do in period of underperformance of the strategy -- would their underperformance be a magnified to the downside as they have been to the upside? How the funds to relative to NAV is not important to me, because all I can experience is the price. are the price and distributions. Total return versus the benchmark index is what counts for me.

    I edit my blog to properly note the type of fund as you suggest, and add a new post to deal with the cyclic performance issues that support my conservative view of time to maturity for this class of funds. If you would like to save me some time and email me the list of other funds in the class, I will do a more complete study (richard.shaw@QVMgroup... Thanks for the observations and keeping me on my toes.

    Richard
    Jun 06 10:32 am |Rating: 0 0 |Link to Comment |View article

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