Top 2 High-Growth ETFs to Buy Now

Investing in high-growth exchange-traded funds (ETFs) can provide significant income potential, particularly when traditional dividend stocks fall short. Two standout options are the Hamilton Enhanced U.S. Covered Call ETF and the Hamilton Enhanced Canadian Covered Call ETF. Both funds utilize advanced strategies to maximize cash flow while exposing investors to unique risks.

Understanding Leverage and Covered Call Strategies

High-growth ETFs often employ leverage and covered call strategies to enhance their income streams. Leverage allows funds to amplify returns by borrowing capital for investment. For instance, a 1.25 times leveraged ETF can potentially invest $125 for every $100 of investor capital. This can lead to increased gains during rising markets, but also significantly higher losses in downturns.

Covered calls are another strategy that involves owning shares and selling call options against them. By doing this, funds can collect premiums that contribute to income. However, this approach caps potential upside if a stock exceeds the strike price of the sold options. The combination of leverage and covered calls can yield robust monthly income. Yet, investors must be aware of the associated risks, including increased volatility.

Top High-Growth ETFs to Consider

• Hamilton Enhanced U.S. Covered Call ETF (TSX: HYLD)

  This ETF currently offers a yield of 12.59%. It assembles various Hamilton’s YIELD MAXIMIZER ETFs, providing exposure to a wide range of U.S. equities and key sectors such as technology, financials, healthcare, and energy. The fund applies covered calls and 1.25 times leverage, which results in a high monthly cash distribution while potentially lagging behind traditional S&P 500 ETFs in strong bull markets.

• Hamilton Enhanced Canadian Covered Call ETF (TSX: HDIV)

  This ETF yields 10.55% and focuses on Canadian equities. HDIV also adopts a fund-of-funds structure, drawing from Hamilton’s YIELD MAXIMIZER series. The sector exposure is primarily in financials, utilities, and energy. Similar to HYLD, it uses covered calls and leverage, leading to substantial monthly distributions but with the same caveats of reduced upside and higher downside risks during market corrections.

Key Considerations for Investors

Investors looking at these high-growth ETFs should consider their risk tolerance. The potential for increased income comes with greater volatility and possible underperformance against traditional benchmarks during robust bullish phases.

In conclusion, both the Hamilton Enhanced U.S. Covered Call ETF and the Hamilton Enhanced Canadian Covered Call ETF are compelling options for income-focused investors. They provide attractive yields through advanced investment strategies, balancing the trade-offs of increased income against market volatility.