# ZPAY vs ZPAY.F



## dubmac (Jan 9, 2011)

both are BMO Premium Yield ETF's with the same holdings and have assets in CAD. ZPAY dropped with the recent bump in the CAD/USD, whereas ZPAY.F did not and keeps climbing (albeit slowly). Both pay same distribution. This ETF's own mostly US stocks etc, and derivatives are partly the source of the highish yield - but, why did ZPAY drop, and not ZPAY.F?


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## AltaRed (Jun 8, 2009)

ZPAY.F is hedged to CAD so the growing strength of the loonie last year is "hedged out" of the equation and it thus tracks constantly. ZPAY in CAD is lower because of the strengthening loonie.

If you had a crystal ball, you would own ZPAY.F when the loonie is strengthening, and ZPAY when the loonie is depreciating. Good luck on making the right decision at the right time.

Added: I have written several times on why one should NOT hedge to CAD.


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## dubmac (Jan 9, 2011)

thanks Alta. I thought it had something to do with CAD/USD, but couldn;t sort it out.
I have ZPAY. Limping a bit with the currency hit on it, but it's all good.


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## agent99 (Sep 11, 2013)

AltaRed said:


> Added: I have written several times on why one should NOT hedge to CAD.


Gosh, I can remember times when I wish I had been able to (or at least had known I could)


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## Gator13 (Jan 5, 2020)

I had a quick look at ZPAY, but couldn't find anything to tell me what their payout target is. The current distribution is quite rich. Maybe I missed something.


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## AltaRed (Jun 8, 2009)

I have no idea but I wasn't responding to the quality of the ETF as I don't believe in such engineered products to begin with and would never own it. My comments were strictly on the difference between the two entities.

Go to Trading Economics and select ALL. This is why one does not hedge. The loonie will trade in/around 80-82 cents as the natural productivity level for Canada vis-a-vis USA. Everything else up/down is a crap shoot and unpredictable.


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## agent99 (Sep 11, 2013)

Gator13 said:


> I had a quick look at ZPAY, but couldn't find anything to tell me what their payout target is. The current distribution is quite rich. Maybe I missed something.


I must be missing something too. It has a distribution yield of about 6.5%. Mostly generated by covered calls? 

Unit value hardly up over 12 months. 

It says that this is their portfolio. Mostly Treasury Bills?

*Top Holdings % *
Treasury Bill 0% 05/06/2021 *76.45% *
Merck & Co. Inc. 2.31% 
Walmart Inc 1.57% 
Costco Wholesale Corp 1.37% 
Pfizer Inc 1.01% Amgen Inc 1.00% 
Microsoft Corp 0.85% 
ViSA Inc-Class A Shares 0.81% 
Edwards Lifesciences Corp 0.77% 
Johnson & Johnson 0.76%

This white paper explains it. Appears to be investing/gambling to achieve yield through option trading when yield is so hard to find. But with so little of the portfolio in long positions, hard to see much growth in unit prices?


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## hfp75 (Mar 15, 2018)

I’d be curious what the ROC is ??? If its high the yield / etf is hardly sustainable....

Have fun calculating your ACB for a product thats just giving you your own cash back... thx but no thx...

My past research has shown me that to juice yield, BMO likes ROC. Looks good from the curb, but under the hood its a 4-banger and Fred Flintstone’s pushing....


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## dubmac (Jan 9, 2011)

I didn't buy it for growth. I got in at low 30's and based on the trading history, I think I can get out at the lows 30's, I don't care much what happens in between


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## l1quidfinance (Mar 17, 2017)

They sell puts and then then sell calls if the puts are assigned. Tresaury bills seem to be the cash cushion for if and when a put gets assigned. 
The etf seems to effectively be using the wheel strategy from what I can see. 

It could be considered a little exotic. Although more history would be nice I like the product and it interests me as I was looking at this type of strategy away from my main portfolio.


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