Most investors associate the U.S. economy with innovation and growth, and hence turn to U.S. equities for their potential for superior relative returns. Yet those also looking for reliable monthly income often find that U.S. equities, broadly speaking, provide limited dividend payouts. In October 2023, we launched the Hamilton U.S. Equity YIELD MAXIMIZER™ ETF (SMAX) as an attractive, income-focused solution that employs an active covered call strategy to generate higher monthly income from exposure to the largest U.S. equities, while maintaining modest growth potential.
SMAX – One Year Later
One year after launching, SMAX has delivered on its investment objective, providing monthly income to investors while capturing much of the growth from large-cap U.S. equities.
- Attractive Yield: 10.79%[1] (paid monthly)
- Annualized Total Return: +33.25% since its inception[2], capturing much of the growth of the S&P 500[3]
- Distribution Growth: SMAX distribution has grown by 7.8% since inception[4]
- Assets Under Management (AUM): $527 million
Performance
TICKER | NAME | 1M | 3M | 6M | YTD | 1-YR | Since Common Inception* | Since Inception* |
SMAX | Hamilton U.S. Equity YIELD MAXIMIZER™ ETF | 1.12% | 4.54% | 14.68% | 26.17% | 33.39% | 33.25% | 33.25% |
S&P 500 | S&P 500 Total Return Index (in Canadian dollars) | 2.15% | 4.53% | 15.47% | 27.53% | 38.45% | 38.77% | 11.03% |
*Annualized
Key Benefits to Investors
- Higher Income: Significantly higher yield compared to dividends on U.S. equity stocks
- Diversification: Exposure to equity leaders with a sector mix similar to the S&P 500
- Tax Efficiency: Covered call premiums are generally taxed as capital gains
- Dynamic Strategy: Flexible coverage ratio to maximize income and maintain ~70% upside growth potential
- Experience: Managed by a team with 40+ years of combined experience
An Income-First Strategy Focused on U.S. Equity Leaders
SMAX invests in U.S. equity leaders — the largest companies in each major sector of the U.S. economy. This focus on top-tier companies ensures a strong foundation for the portfolio, featuring businesses with a proven track record of stability and performance. Additionally, SMAX invests across multiple sectors to closely align to the sector mix of the S&P 500, providing investors with important diversification.
At the heart of SMAX is its income-first covered call strategy. This involves selling at-the-money (ATM) call options on stocks held within the portfolio to generate additional income through cash premiums. By employing this strategy on ~30% of the portfolio, SMAX allows investors to benefit from higher monthly income without completely sacrificing exposure to market growth, as the remaining ~70% of the portfolio is fully invested in the underlying stocks to participate in potential capital appreciation.
For investors looking to maximize their monthly income from U.S. equities, we believe the Hamilton U.S. Equity YIELD MAXIMIZER™ ETF (SMAX) presents a compelling solution. With its focus on generating higher tax-efficient monthly income, diversification across sectors, and exposure to leading U.S. companies, SMAX balances the need for monthly income with modest growth potential.
For additional information on our suite of YIELD MAXIMIZER™ ETFs, please CLICK HERE.
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A word on trading liquidity for ETFs …
Hamilton ETFs are highly liquid ETFs that can be purchased and sold easily. ETFs are as liquid as their underlying holdings and the underlying holdings trade millions of shares each day.
How does that work? When ETF investors are buying (or selling) in the market, they may transact with another ETF investor or a market maker for the ETF. At all times, even if daily volume appears low, there is a market maker – typically a large bank-owned investment dealer – willing to fill the other side of the ETF order (at net asset value plus a spread). The market maker then subscribes to create or redeem units in the ETF from the ETF manager (e.g., Hamilton ETFs), who purchases or sells the underlying holdings for the ETF.
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Commissions, management fees and expenses all may be associated with investments in exchange traded funds (ETFs) managed by Hamilton ETFs. Please read the prospectus before investing. Indicated rates of return are the historical annual compounded total returns including changes in per unit value and reinvestment of all dividends or distributions and does not take into account sales, redemptions, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Only the returns for periods of one year or greater are annualized returns. ETFs are not guaranteed, their values change frequently and past performance may not be repeated.
Certain statements contained in this website may constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information may relate to a future outlook and anticipated distributions, events or results and may include statements regarding future financial performance. In some cases, forward-looking information can be identified by terms such as “may”, “will”, “should”, “expect”, “anticipate”, “believe”, “intend” or other similar expressions concerning matters that are not historical facts. Actual results may vary from such forward-looking information. Hamilton ETFs undertakes no obligation to update publicly or otherwise revise any forward-looking statement whether as a result of new information, future events or other such factors which affect this information, except as required by law.
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[1] An estimate of the annualized yield an investor would receive if the most recent distribution remained unchanged for the next 12 months, stated as a percentage of the price per unit on October 31, 2024. The yield calculation excludes any additional year end distributions and does not include reinvested distributions.
[2] As at October 31, 2024. The graph illustrates the impact to an initial investment of $100,000. It is not intended to reflect future returns on investments in SMAX. The index performance returns are for illustrative purposes only, and the returns do not reflect any management fees, transaction costs or expenses. Investors cannot invest directly in an index.
[3] As at October 31, 2024. S&P 500 is the S&P 500 Total Return Index in Canadian dollars.
[4] As at October 31, 2024. Initial distribution of $0.1600 per unit. Last distribution of $0.1725 per unit. Distributions are subject to change. For a complete list of historical distributions, please see https://hamiltonetfs.com/etf/smax/.