In terms of risks that one accepts in investing in this fund, the investor should understand that the fund “can potentially lose up to the entire strike price of each option it sells” and this would occur of course if put options that are sold close in the money upon expiration. The fund itself attempts to counter-balance this effect with the collection of premium from the puts that it is selling within the portfolio.
To get a flavor of some of the names that are incorporated in the index at the moment (think volatile large cap stocks, and thusthey have linked options that are also volatile), most will not be surprised at some of the following equities: EXPE, RAX, INCY, LNKD, NFLX, FB, GMCR to name just a few.
While HVPW has limited live performance and many managers may sit on the sidelines for a bit before leaping into the fund, there appears to be healthy retail and perhaps institutional interest as the trading volume in the fund has steadily climbed over the past several months as the fund has marched higher in terms of price appreciation since inception.
We suspect that portfolio managers that like the idea of incorporating options strategies into their overall plans for ETFs will find appeal in such a strategy, as will those managerslooking for something that generates current income in the form of the distributions that the fund regularly makes (at the end of each 60 day period).
