#Notional value of dia etf update

However, the underlying portfolio of ETV is also heavily skewed with the holdings in those indexes. While that is the case against any index writing, other funds implement holdings that would offset these moves.įor example, Eaton Vance Tax-Managed Buy-Write Opportunities Fund ( ETV) writes calls against the S&P 500 and Nasdaq Indexes. Therefore, they are always essentially writing naked options that are cash settled.

The reason is that an index can't really be owned outright. I view this as a potential risk and a negative for the fund.

Instead, in their last report, they had written against the S&P 500. In addition to that oddity, the fund also has chosen not to write calls against the DJIA index. That isn't something that most CEFs do regularly. Interestingly, instead of just writing calls, this fund is also purchasing some calls too. The reason is that the fund could limit some of the upside should the index start to rally. Having a higher overwrite would indicate a more bearish stance on the DJIA. The different weightings they can target also introduce more flexibility to the fund. With the fund's strategy of writing calls against both index and underlying positions, they utilize a more flexible strategy. A Look At DIAX's Portfolio, Odd Positioning At the same time, like most option-writing funds, the fund's expense ratio is also quite competitive in the closed-end fund space. The fund is also a fair size, which generally provides enough liquidity for retail investors. There is no leverage to add to volatility - which would seemingly make sense as they are looking to tamp down on the overall volatility. Overall, it's quite a simple strategy and isn't anything too exotic. The BasicsĭIAX's investment objective is 'to offer regular distributions through a strategy that seeks attractive total returns with less volatility than the Dow Jones Industrial Average (DJIA or 'Dow 30').' In an attempt to achieve this objective, the fund will invest 'in an equity portfolio that seeks to substantially replicate the price movements of the DJIA, as well as selling call options on 35-75% of the notional value of the Fund's equity portfolio (with a 55% long-term target) in an effort to enhance the Fund's risk-adjusted returns.' As of their last report, the fund was overwritten by 50%. The DJIA has been the laggard with growth rebounding. Of course, we know so far in 2023 the opposite has been true. However, unlike the S&P 500 and Nasdaq, which were bogged down severely by growth names, the Dow Jones Industrial Average held up relatively better. The fund road the highs through the end of 2021 like the broader market did, only to see more muted results in 2022.

#Notional value of dia etf update

Since our last update, the fund's performance has been relatively flat on a total return basis.ĭIAX Performance Since Prior Update (Seeking Alpha) Conversely, a discount/premium that is running higher than a fund's historical range can often indicate a name worth potentially selling. Generally speaking, looking for discounts that are wider than usual can indicate something is worth looking into further for a potential opportunity. To catch my attention was the fund going to a relatively larger discount compared to its own historical level once again.Ī discount on its own isn't necessarily a good determining factor if a fund is attractive or not. Since then, the discount narrowed, and it wasn't brought up until more recently. Nuveen Dow 30 Dynamic Overwrite Fund ( NYSE: DIAX) is a name I last touched on over two years ago when it was trading at a large discount. This article was originally published to members of the CEF/ETF Income Laboratory on May 17th, 2023. Written by Nick Ackerman, co-produced by Stanford Chemist.