As of November 29, 2024, the S&P/TSX 60 Index posted a robust +25%[1] year-to-date gain, offering positive returns for many Canadian investors. However, this performance has not been uniform across sectors, and the telecom industry in particular has faced notable challenges. Canada’s “big three” telecom giants — Bell (BCE), Telus (T), and Rogers (RCI) — have seen their common stock share prices decline significantly in 2024: Telus ↓7.6%, Rogers ↓20.0%, and BCE ↓27.4%[2].

For investors holding BCE, T, or RCI shares that are in an unrealized capital loss position, within non-registered accounts, these declines present an opportunity to crystalize those unrealized losses to offset taxable gains through tax-loss selling. When executing this strategy, Canadian investors need to be aware of the CRA’s superficial loss rule, which states that you can claim a loss for tax purposes on a security you sell at a loss, but you cannot repurchase the same security within 30 calendar days. To avoid this, investors can sell the underperforming stocks at a loss and maintain exposure to Canadian telecom companies by reinvesting the proceeds into an ETF. Two options to consider are the Hamilton Utilities YIELD MAXIMIZER™ ETF (UMAX) and the Hamilton Enhanced Utilities ETF (HUTS). CLICK HERE to learn more about tax-loss selling.

Hamilton Utilities YIELD MAXIMIZER™ ETF (UMAX)

With diversified exposure across utilities, including pipelines, railways, waste management, and telecoms (BCE, Telus, and Rogers), UMAX uses our income-first covered call strategy to deliver higher monthly income while maintaining modest upside potential.

• High Monthly Income: Yield of 13.91%[3] with monthly distributions
• Income-First Strategy: UMAX employs a covered call strategy on ~50% of its portfolio to generate additional income
• Tax Efficiency: Covered call premiums are taxed as capital gains, offering a potential tax advantage over traditional income sources

UMAX vs. S&P/TSX Capped Utilities Index — Growth of $10K

 

Growth of $10K of the Hamilton Utilities YIELD MAXIMIZER™ ETF (UMAX) vs. the S&P/TSX Capped Utilities Index, from June 14, 2023 to November 29, 2024. The graph illustrates the impact to an initial investment of $10,000. It is not intended to reflect future returns on investments in UMAX. 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.

Source: Bloomberg, Hamilton ETFs.

Performance

TICKER	YIELD	1 MONTH	3 MONTH	6 MONTH	YTD	1 YEAR	INCEPTION*
UMAX	13.91%	1.8%	3.2%	9.3%	10.9%	14.2%	7.8%

As at November 29, 2024. *Annualized

Hamilton Enhanced Utilities ETF (HUTS)

HUTS offers exposure to a broad range of utility companies, including the telecom sector, with a focus on growth through the use of modest 25% leverage. This ETF is an attractive option for growth investors seeking diversified utility exposure with the added benefit of enhanced monthly income and long-term growth potential.

• Diversification: With exposure to Canada’s largest utility, telecom, and pipelines, HUTS goes beyond traditional utilities to provide further diversification
• Enhanced Growth Potential: HUTS employs modest 25% leverage to enhance long term growth potential
• Enhanced Income: Yield of 6.89%[4] with monthly distributions

Benefits of Modest Leverage — Growth of $10K

 

Growth of $10K of the Solactive Canadian Utility Services High Dividend Index TR (SOLCUHDT) x 1.25 versus the S&P/TSX Capped Utilities Index (TTUTAR), from December 7, 2011 to November 29, 2024. 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.

Source: Bloomberg, Solactive AG, Hamilton ETFs.

Performance

TICKER	YIELD	1 MONTH	3 MONTH	6 MONTH	YTD	1 YEAR	INCEPTION*
HUTS	6.89%	2.0%	6.1%	15.6%	16.8%	22.1%	(1.1%)

As at November 29, 2024. *Annualized

 

• CLICK HERE to view another Tax-Loss Switch Idea: TD Bank

 

Important Considerations for Tax-Loss Selling

Tax-loss selling can be a valuable tool for managing your portfolio and tax obligations, but it requires careful planning. Keep the following in mind:

• Seek Professional Advice
  Consult a tax professional to ensure your strategy aligns with your financial goals and complies with applicable tax regulations
• Monitor Deadlines
  Pay attention to year-end deadlines if you want to apply losses to the current tax year. Remember, trade settlements typically occur two business days after a sale, so plan accordingly to ensure transactions are finalized on time

 

This material is provided for informational purposes only. The information contained herein does not constitute, and should not be construed as, investment, tax, or legal advice. Specific investment decisions and strategies should be assessed in the context of an individual’s personal financial objectives, and professional advice should be sought for any particular circumstances.

 

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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] As at November 29, 2024. Source: Bloomberg
[2] Price return since December 29, 2023. As at November 29, 2024. Source: Bloomberg
[3] 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 November 29, 2024. The yield calculation excludes any additional year end distributions and does not include reinvested distributions.
[4] 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 November 29, 2024. The yield calculation excludes any additional year end distributions and does not include reinvested distributions.