The Canadian Investor - Is Canada’s Best Compounder Losing Its Edge?

Episode Date: May 26, 2025

We break down key insights from Constellation Software’s recent AGM, where CEO Mark Leonard was candid about the challenges of deploying capital at scale, potential “style drift,” and the limits of future returns. Despite the company’s exceptional track record, Leonard warns that the days of 25%+ annual returns may be behind them—though opportunities could still remain if they navigate carefully into new verticals. We also dive into the surging popularity of covered call ETFs in Canada. But what are the real risks and benefits of these ETFs? We explain how these funds work, their pros and cons, and why some investors may be setting themselves up for disappointment by chasing double-digit yields. Tickers of stocks discussed: ZEB.TO, ZWB.TO, CSU.TO Get your Calgary Meetup Tickets here! Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Finchat.io for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

Welcome back into the show. This is the Canadian investor podcast made possible by our friends and show sponsor EQ Bank, which helps Canadians make bank with some of the best rates on the market. I personally, and I know Simone as well, is using the GICs on a regular basis to set money aside for personal income taxes in April or February. Their GICs are perfect because the interest rate is guaranteed, and I know I won't be able to touch that money until I need it for tax time. Whether you're looking to set some money aside

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Investing is simple, but don't confuse that with thinking it's easy. A stock is not just a ticker. At the end of the day, you have to remember that it's a business. Just my reminder to people who own safety goals, don't be surprised when there's a cycle. If there's uncertainty in the markets,

there's going to be some great opportunities for investors. This has to be one of the biggest quarters I've seen from this company in quite some time. Welcome to the Canadian Investor Podcast. I'm back with Dan Kent. quite some time. Welcome to the Canadian Investor podcast. I'm back with Dan Kent. We are here with a regular episode. I think it's going to be a fun one. We're going to have a little bit of everything.

So for people who are supporters of the show for a long time, we'll be talking about Constellation software. I know there's a lot of people who own that. Obviously a little nod to Braden who loves Constellation Software. So I think you'll be happy with that segment. And then we'll talk about Covered Call ETFs because they've really risen in terms of asset under management and popularity, especially in Canada. So I think we'll have a fun segment. We've talked about covered call ETFs before, but not that deep of a dive.

So if you're interested with those kind of ETFs, getting additional income, make sure you listen to that segment because I think it's going to be a fun one. We'll try to be as impartial as we can. I like the benefits and the risks, but making sure that people who are interested with these have all the information available. But before then, let's get started on Constellation software and their annual general meeting. Yeah, so Constellation, I believe they held this last week. It was May 13th, I think. And there was actually a lot of good information inside of this AGM.

And they kind of gave some in-depth insight on what I feel has been one of the best capital allocators in the country for probably two decades, I would say. I mean, to give you an idea, you could have bought Constellation for around $25 back in 2007 and you're paying $5,000 today. So the one thing that's interesting about this AGM is obviously as a company gets larger, capital deployment gets a bit harder and we're kind of starting to see this inside of the commentary in the AGMs. And I mean to give a quick introduction into what Constellation does in kind of the simplest form,

I don't want to go too comprehensive on it. They pretty much acquire cash flowing vertical market software companies and kind of merge them into the fold. I mean they've made hundreds and hundreds of acquisitions since they started. So VMS typically targets like a niche style software, most on a recurring subscription base, whereas on the flip side, you could look to a horizontal market software would be one that's designed for a wide range of services. So, I mean, we could think of something like Microsoft Excel would be like a very broad base piece of software. They charge, you know, a recurring subscription for it, the whole platform effectively. Whereas something like electronic medical records, maybe as like a, as a vertical market

and VMS is are so niche that they typically have pretty high switching costs and very sticky renewal rates because you know, companies typically can't go to other pieces of software. They're critical for the operation of the business. So things like that. And just overall, they have proven for, you know, as I said, multiple decades that, you know, they've been able to acquire these businesses, which typically don't grow super fast,

but they're cashflow positive. They serve a niche market, things like that. They, you know, so organic growth rates for Constellation are not super high, but they're able to just acquire these companies so well and grow through acquisition. It's been a very successful business model. And to the call, the first thing I'll focus on is kind of the comments on capital deployment. So Mark Leonard, who is the CEO mentioned that the company has managed to deploy capital over 1 billion in capital every year for the last four years. However, he mentioned that

deal flow is kind of getting much harder to sustain. And this was one of the main bear cases, I guess you could say. And we had mentioned this before we started recording was that they would simply run out of targets to acquire, which ultimately might impact a business. And he did mention that the quality, or sorry, the quantity of VMS targets is growing, but the quality is not. So as a result, they mentioned that they might have to span out to horizontal markets in order to deploy more capital. And as a result, he kind of stated that this type of style drift at, you know, meaning going away from what the company is, has been good at for many years, often comes with worse performance. So whether they asked, they asked him whether or not he could deploy, sorry here, I got mixed up on my notes.

So he asked him, they were asking him whether or not he can deploy a larger amount of capital and he mentioned that they probably cannot do this indefinitely without evolving the company's strategy. And one of the main things that actually tends to happen when capital can't really be deployed efficiently is companies often turn to dividends. However, they did mention that it does not plan

to offer large dividends. They do not wanna repurchase shares at current prices. Instead, they would rather deploy the capital into new verticals, even if the returns become less predictable. Just overall as a shareholder, I'm not really concerned with this. Yes, I mean, expanding in a new vertical certainly, you know,

ventures away from what the company has done very, very well for a very long time. But I do believe that this is one of the best management teams in the country. And I'm sure they'll find a way to navigate around it. I don't know if you have any thoughts on that. I know we were chatting before we fired up the record button. Yeah, and before I give my thoughts I just want to share here with listeners that may not be as familiar with Constellation software how well they've done. So since toward the start of 2010 or the end of 2009 the returns

have just been phenomenal. So they've returned over 17,000 percent Which is crazy if you compare that to the Nasdaq, it's 1100 or 1200 percent if we round up for the S&P 500 is close to 600 percent and the TSX or the TSX 60 it's close to 252 percent so just to give you an idea how much of a, just they've crushed it. Like there's really no way around it. And in terms of my thoughts on that,

I think people, I get the question every now and then, like why don't you own Constellation software? Like Braden has owned it for so long. Well, I think the answer is simple. I don't have the same conviction as Braden for this company. Granted, he's done a lot more research on it than I have. My issue is always, I mean, I wouldn't say always, but it's been the deal flow. I always had concern that that might slow down. And more recently, I was actually pretty close at starting a position late 22, early 2023. But then the other thing I was a little,

I saw as a risk and maybe, maybe it's not, maybe it's a tailwind for them, but it's AI, right? Because they roll up a lot of small tech plays and my fear with a name like this is you start getting disrupted by other companies in all those roll-ups because they can replicate what you do for a fraction of the cost using AI. And sure, I'm sure they are leveraging AI within those businesses. A lot of them, I'm sure they are. But I feel like some

may be ripe for disruption because I don't know how many thousands of companies they have rolled up, but you can't all assume that they're embracing AI all of them. Most of them probably but it may also create some new opportunities but to me that's what really prevented me is I thought AI could be a big disruptor for them. I may come be completely off there but that's the reason why I don't own it. No you're definitely not off because they I actually wrote that here next. AI is definitely a headwind for the company. I mean, at least the way they were talking on the call.

As an investor, I'm always looking to reduce my fees, which is why I'm excited that Questrade now offers zero dollar commissions on stocks and ETFs. But Questrade isn't just about commission free trading. You can also get USD accounts so I avoid forced currency conversion fees when trading US stocks. Plus get access to their advanced edge trading platform available on desktop, web, and mobile. I've been using Questrade for many years, and so has Simong.

And their platform makes trading seamless, whether you're managing a long-term portfolio or making active trades. Don't miss out, start trading commission-free stocks and ETFs today. Visit questrade.com to learn more. Between meetings in Toronto and conferences in Vancouver, I'm not home as much as I'd like.

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right here in Canada. Visit bimoets.com for more. So another question many have in regards to Constellations companies is how many of them will be replaced by AI? And I mean, again, this is a perfect valid concern to have. I'm sure everybody who's listening has had some sort of piece of software that they might've subscribed to, something like that, where AI is effectively replace the entire thing. I mean, we're looking at,

like there's so many markets like that. I mean, one that's super easy that I think a lot of people can relate, and I know you and I use it all the time. Like it's whether it's ShadGPT a lot of people can relate and I know you and I use it all the time. Like it's whether it's Chad GPT or one of the other LLMs, I mean, I do not use Google that often anymore. No.

Like for search. I use Chad GPT way more often. Like I was talking to Dan Foch a couple of days ago and we were actually talking about that and I said, look, I think most of the time I'll use Google to search because I'm looking to go to like a nearby bike shop and I just want to double check the the opening hours and that's the easiest way to do it like yeah kind of thing I do which is not that great for a Google and just shows how that's an obvious example how easily it can disrupt the business line.

Yeah there's a lot of I mean especially when you get into these smaller software companies. I mean, Constellation, they kind of talked about, you know, previous kind of revolutionary things we're talking like, like mobility, cloud platforms, etc., that were supposed to disrupt the business and they really never did. But they do acknowledge that there is a chance that low touch offerings could be replaced by like as you mentioned very lightweight AI platforms which can probably charge much less to offer the same functionality by low touch pretty much means little human involvement. So you're talking about a platform that really doesn't require much human involvement period.

The only thing is the bulk of Constellations companies and I'm taking this from the company themselves. I actually have not looked into a bunch of the underlying companies in terms of this, but they said that most of their companies are high touch integrated options. So they require, they still require a lot of human involvement, which likely wouldn't lead to a lot of AI disruption. So there's a bit of insulation there, but the only thing is, is I mean, AI is in its infancy. So I mean, who knows how, you know, if it could eventually

replace these, you know, high touch type integrated softwares, that's gonna be difficult to tell because I mean, even think of ChatGPT even a couple of years ago was, I mean, I remember you used to ask it questions and it only had data from like nine months ago. Yeah, exactly. And now it's like- You can use the deep research stuff.

The deep research is nuts. Gives you all the sources. So it's a great tool I mean to do some research and you always have to double check obviously can't get everything yeah take everything for granted but the fact that it gives you the sources with it you know I think I mean I've seen the improvement it's pretty crazy. Yeah notable yeah and who knows where it'll be in five ten years so it's definitely something to keep an eye on they they definitely said they were concerned but they did say they're also they're also it'll be in five, 10 years. So it's definitely something to keep an eye on. They definitely said they were concerned, but they did say they're also insulated to a certain degree.

So some commentary on acquisition. So Leonard mentioned that smaller deals still provide stronger internal rates of return than the larger ones. However, he also mentioned that smaller deals are becoming more costly, which could ultimately erode returns over the long term. So the company's main strategy over the years has been to make those smaller deals for cash flowing companies and kind of nurture them over the long term. They mentioned that there is a lot of temptation to chase larger deals, and I would imagine this is due to the valuation of smaller deals and could definitely be you know another element of that

Style drift that he had mentioned and probably the most interesting part of the call. It was relatively short He only commented on it for a couple minutes, but it was on valuation. So He effectively said that he's not interested in generating market rates of return, meaning he's not looking to earn 6 to 8% annually. He aims higher. He says if you want those market rates of returns, buy an ETF. He also mentioned that Constellation Software is inside many of those ETFs, suggesting that they're kind of priced for a 6 to 8% return moving forward. So he did mention that if you want to make 20 to 25% rates of return and Constellations compound annual growth rate over the last 10 years is 27%. He mentioned you'd likely have to buy Constellation at a quarter of the current price. So in a nutshell, he's pretty much stating that the stock price is way too expensive

today to expect those types of returns moving forward. And I mean, obviously this is to be expected. I mean, this is a maturing business capital. Like he's mentioned numerous times, capital is becoming more difficult to deploy, which probably means that it's going to be harder to turn out these large scale, not only market beating, like market crushing returns that it's done over the last while. That said though, this is assuming that there is no change to the underlying fundamentals. I mean, if the company can navigate to new markets, open up new avenues for acquisition, it could certainly drive strong

returns moving forward. And I mean, effectively, like what I take from this is he's he states that Constellation is an outstanding business, but the stock price is already reflecting that. And I mean, I think once that happens, it's it's pretty hard to turn out, you know, 20% plus rates of returns. I don't know if you have any thoughts on that. Yeah, no, I mean, I agree. And what I while you were talking, I was searching the transcript, because the first thing that came to mind, I'm like, there must be more competition from

private equity. And lo and behold, I control F and private equity term comes up multiple times. Oh, really? Yeah. And he does say that, you know, they do a much like, just reading quickly, like I'm paraphrasing that they do a better job than PE firms on it. But they also, you know, there is somewhat like more competition from private equities trying to be like a little bit of a copycat with roll ups and stuff like that.

So it is something that is probably, because at the end of the day, even if a PE firm is not doing as good of a job for like, then they are, doesn't matter. Because if they're bidding on the same kind of businesses, then the cost of these businesses will like, will go up because there's more demand for it. So that, that's something. And this is just keywords. So obviously those listen to full call, there might be some additional context, but I was able to see that quickly. Well, yeah, it's definitely valid.

Like the more people that get eyes on these businesses, I mean, they're probably willing to pay a little higher multiple than Constellation maybe would have a while ago, which ultimately, I mean, the more you pay for a company, the less you're gonna realize in returns moving forward. So obviously that side of things, uh, competition raises valuations, which ultimately will, you're not going to return as much.

And in the business world, when you have a company that does very well, regardless of what it is, and they do like exceptionally well, I'll just say that in consolation, you get copycats. You have other businesses that want to get in on that. I mean it's the same thing, right? Like if you think about like this is not a hockey podcast, but what do you see in the NHL time and time again, year after year, when you have a Stanley Cup winner, you look at the composition of the team and then you have several teams the following year that

tried to mimic that model. Chase it. Chase the model because that's what's been working. It's a bit of a copycat. It's not surprising that they're a little bit of victim of their own success. Yeah, definitely. I mean, I'm not all that surprised to hear the company stating that their runway isn't infinite.

I mean, you know, they will they will now need to be, you know, a bit more disciplined in deploying capital as it becomes, you know, harder to do it at larger scales. Obviously, you know, their free cash flow is substantially higher than it was even a decade ago. So what are you going to do with it? You can retain it, you can pay it back as a dividend, you can buy back shares, which they don't do. If you look at Consolation's shares outstanding chart, it is effectively flat. I think it's like 21.2 million shares outstanding. It's been like that forever. So they don't buy back shares. They do pay a dividend, but it's minuscule. So I mean, they're gonna continue to acquire companies

and it just gets more difficult the more money you have. I mean, we've heard that from somebody like Buffett. I mean, when you're deploying billions of dollars, it becomes more difficult to do it profitably. And like to me, I mean, when you're deploying billions of dollars, it becomes more difficult to do it profitably. And like to me, I like the idea that the company is still focused on investing rather than returning capital to shareholders. No buybacks, no large dividends, just continue to acquire. Although this is riskier for current investors, if they do get a lot of that style drift and they have to kind of expand their horizons if they can't you know

find a way to deploy you know multiple billions of dollars every year. I mean if I were to trust one management team to navigate it well it would probably be this one. I've had a lot of concerns questions and concerns about first off the valuation comments and the returns comments and I mean the company is just being fully transparent here the days of you know 25% compound annual growth rates are likely over but that doesn't mean the company is just being fully transparent here. The days of 25% compound annual growth rates are likely over, but that doesn't mean the company still can't generate market beating returns. I think maybe as shareholders, we've been spoiled a bit in the fact that we've realized such amazing returns over the last while.

The thought of them going away kind of disappoints us. But I mean, even if the company can grow free cashflow per share at a double digit rate, is that really a bad thing? I mean, even a lot of the major tech companies south of the border, they typically don't grow at those rates. So I don't really think the fact that the company's stating

they're probably not gonna be able to grow at a 20, 25% pace anymore is really all that big of a deal. They're not saying that they're going to struggle to grow. They're just kind of saying that they're probably not going to be able to keep up with that. I just overall, I mean, the conference call discussion could have easily taken up an entire episode, but I kind of picked out the key points here. And if you want to listen to it, it's an excellent call. He is a very smart man and I continue to hold ad at regular intervals

I think in terms of overall execution. It's one of the best tech companies in Canada and It was an interesting call. Yeah, I mean I think it's interesting that you brought up Berkshire because There is similar but different at the same time I guess the one thing is Constellation specializes in more this kind of specific, very targeted approach, whereas Berkshire is definitely more diversified. They do still concentrate in some kind of industries

that they prefer investing in, but there's more diversification. Clearly Berkshire is much bigger. There's a big insurance business, but there's more diversification. Clearly Berkshire is much bigger. They're, you know, there's a big insurance business, but if I had to bet, I'd probably go with Berkshire just because I think having that flexibility of investing in different sectors,

different kind of businesses, I think to me it's a bit more attractive, but again, I don't think you can really go wrong with either of them. It's just a different kind of approach, I would say. Yeah, I mean, Constellation is a lot more niche, whereas Berkshire is gigantic conglomerate of a multitude of companies, but I think the key thing here is they're gonna be-

They could buy Constellation and not make too big of a dent from their cash pile. So yeah. I don't know It all depends, you know if they're if they're gonna venture out Outside of VMS like how you know how well they do that Again, as he mentioned they can deploy capital like they've been deploying over the last three four years But they cannot do it indefinitely. So I mean at some point you have to shift. Yeah, no, that's good. That's a great overview.

So everyone who loves consolation or any of their spinoffs, I'm sure they enjoy that segment and they probably disagree with everything, all the concerns that I said and that's fine. And like I've said before, I think it's always good to listen to people that whether you agree or not with them.

And even if you mostly disagree with me maybe one of the things where I have my reservation with Consolation maybe it's something that you're like oh okay actually you know that's a valid point and something I'll keep an eye on so I think that's always important to make sure you listen to the different viewpoints. Yeah the one thing I guess I'll say on on Consolation is I do own it and follow it, but there is a lot smarter people than I on the company. I mean, there's some people who who live and breed this company. I mean, yeah, there's a lot of people who follow this extensively. It's just kind of one of my positions. I do follow it. I'm not like, crazy comprehensive into the company itself. So if I've said anything

wrong, take it easy. Yeah. Yeah. And that's probably that's a good point because I think that is the last reason why I've never invested in it is because I've never really had the willingness to do a deep dive on it. Obviously I know a little bit about the business through you and Braden, but you know, having to try and get to know the business really well when there's thousands of businesses underneath it, you can understand their strategy. It's something that wasn't worth the time for me and clearly I should have taken the time but that's okay. You win some, you lose some.

There's some people, some accounts on X that follow every deal this company makes. It's like a full-time job. It's a full-time job. So that's not me, but I do have a reasonable understanding. Okay. No, that's good. So we'll move on to the covered call ETF. So I was walking.

I like to walk because it's everyone I've talked about a few times on the podcast. I have back issues, although it's been doing very well since I got a procedure done late last year. But you know, sometimes I come up with ideas on a walk and I figured covered call ETFs because I felt like there seems to be more and more interest in them. And so I started doing some research and I'm definitely not wrong. So the asset under management have definitely grown. So before I get into that I wanted to do a quick primer just because I know we get some new listeners all the time and we've talked about covered calls in the past. It's been a while and I wanted to do a quick recap and we're going to do a bit more of a deeper dive here on covered call

ETF specifically. So covered call just means that you're using a call option to generate income. You sell a call option for a stock that you own. That's why it's covered, because you own the underlying security. Say the stock trades at $100. You sell the call option with a strike price of $110. In exchange, the buyer of call option receive pays you a $5 premium So you get a premium in exchange so you get that premium regardless because you're selling That call option so the buyer of the option has a right to buy that stock for a hundred and ten dollars for the duration Of the options contract. There's other types of options contract thinking Europe. You can't Exercise them before the end. I think you have to wait until...

Yeah, you have to do it on the date. Do it on the date, but for US options contract, and I think Canada is the same, you don't have that requirement. And if the buyer of the option contract exercises it, you must sell the stock at that price. So in this case, $110, so if the stock is trading at say $130, you still have to sell it to $110 if they exercise the option. On the other hand, it's possible that the stock never goes above $110, so the option contract would not get exercised, but in either case like I said, you get that $5 premium that the buyer of the option paid you.

The issue with covered call option is that it really caps your upside. In the example I gave, if the stock goes up to $130, $150, $200, it doesn't matter. Your profit will be the same because you sold the call option at $110. So your profit, if you sold it when the stock was a hundred will be ten dollars So the difference between a hundred and a hundred and ten plus the five dollar premium that you got so you profit fifteen dollars That profit doesn't change whether the stock the the option is exercised when the stock is worth a hundred thirty one fifty two Hundred a thousand doesn't matter. So that's how it caps your upside It will help to lower the downside a little bit because if the stock stays below that $110 strike

price then you have the additional profit of $5. Even if the stock drops it kind of cushions your losses a little bit because of that premium. It's called a covered call like I said because you own the underlying stock. And in terms of ETFs, some will have multiple stocks in the ETF, and some ETFs will be focused on a single stock using this strategy. There's even ETF that will use leverage to boost the yield that is generated from those premiums, but that comes of course, whenever you use leverage, comes with additional risk. So that's kind of a primer. Dan, did I miss anything there as a primer?

No, not really. I mean, I guess the one explanation that we could maybe do here is just a difference between a covered, like the covered call you own the shares. So effectively you're, you know, you might have to sell a stock at less than market value, but the only why they call them covered, you own the shares, just a primer on the opposite of this which would be a naked call option where you don't own the shares and you can see how you could get in trouble here because if you sell that option and you don't own the shares if that stock goes to 130 150 $200 you have to buy those shares at that value and then sell them at the 110 so that's why these are you know a a bit,

well actually they're substantially less risky than like a native call option where you can end up losing your shirt on those. But yeah, just the difference in there other than that pretty well explained. Yeah, exactly. And I think that's important. Like it's not a risky strategy per se. I guess you do have some risk because you're risking some upside, right? So there is a different kind. Opportunity cost, yeah. Yeah, exactly. But from, it's probably the safest option strategy. I mean, you're effectively selling speculation. Whoever's buying that contract is speculating on price movements and you're charging them a premium to do so. Yeah, exactly.

As an investor, I'm always looking to reduce my fees, which is why I'm excited that Questrade now offers zero dollar commissions on stocks and ETFs. But Questrade isn't just about commission free trading. You can also get USD accounts, so I avoid forced currency conversion fees when trading US stocks. Plus, get access to their advanced edge trading platform available on desktop, web, and mobile.

I've been using Questrade for many years, and so has Simon. And their platform makes trading seamless, whether you're managing a long-term portfolio or making active trades. Don't miss out. Start trading commission free stocks and ETFs today. Visit questrade.com to learn more.

Between meetings in Toronto and conferences in Vancouver, I'm not home as much as I'd like. So I've been thinking while I'm off enjoying someone else's Airbnb, why have I not put my own place up on Airbnb to earn a little extra income and help me pay for the trip? With Airbnb's local co-host network, I can find someone to handle everything. Bookings, guest support, even the cleaning. It's a simple way to make extra money while I'm traveling without the hassle of hosting it all myself. If your place often sits empty while you travel, it might be time to let it work for you.

Find a co-host at airbnb.ca forward slash host. It's the small things that make us Canadian. At Beemo ETFs, all of our from, or covered call ETF market in Canada, so it went from, or covered call ETF market in Canada, so it went from around 50 funds in 2019 with about 10 billion in asset under management to nearly 200 funds in 2025 with 30 billion asset under management. So that is quite massive for the Canadian market, like that's not like in the US that would be small potatoes But in the Canadian market, that's pretty substantial

And the first fund was launched in the early 2010s the funds grew steadily back then but it was more modest growth So it really picked up in last five years or so And of course the with the pandemic the popularity of the funds really went through the roof. If you keep in mind, like now it seems like really far in the past. But for the first, I guess, for most of the like kind of pandemic, pandemic, when we had the lockdowns, I mean, interest rates were at historical lows. So if you wanted to try and generate some income, well covered call ETFs or covered call strategy in general became pretty attractive. Nowadays, I mean, obviously you can get decent yield

on government, US government bonds even, you can get four or 5%, but if you're using these funds, it's not unusual to see 10% plus in terms of yields from these funds. So it does offer you a much higher yield than what you could get from equivalent funds. So definitely the income is attractive. Any comments on that before I go into the pros and cons? No, I mean, I think one of the main, like pre-pandemic, I rarely ever heard of these. Like they existed, but I get like very few questions

on these funds. During the pandemic, I think, you know, a lot of people might've lost their jobs. A lot of people might've, you know, there's been so many, let's say YouTube channels that have surfaced. Yeah, yeah. So your income's gone, you wanna generate income.

Like everybody, you know, so many people started YouTube channels during the pandemic. They started, you know, so many people started YouTube, YouTube channels during the pandemic, they started, you know, promoting a lot of these funds, a lot of these passive income strategies. And I mean, covered call ETFs, as you've noticed, like exploded in popularity, whereas pre pandemic, there was, there was a few of them relatively, you know, they didn't really grow all that much. And yeah, it's just and the thing is, is fund managers will ultimately go

where the money is. So if there's demand for these products, they will create whatever products they can because we've seen, you know, it started out as covered calls, then it moved into at the money call option. So at the money is effectively you're, you're selling that covered call very close to the current price. So you get a higher premium because there's a higher likelihood that it will be exercised. So you get, you cap your upside more, you collect a higher premium, which ultimately

boosts the yield. And then we saw them bring in leverage. So the upside is capped. So they'll combat that with you know Adding leverage to the fund and I mean it's endless and yeah, it's just crazy growth in these funds over the last You know five or so years Yeah, and when I say fire for if you're not familiar with that acronym, it's financial independence Retire early so a lot of them want to generate some income so they can basically just live off of their

investments. Now in the pros here, there's high income generation. So clearly like I cannot, we can't pay debt. So if your primary goal is income generation and getting high yield, then you'll be hard pressed to find anything else that comes close to that. If you're strictly looking at that high income generation. And there are like issues with that, but I'm just trying to get the pros done. I'll talk about them and I know you will a bit later as well.

There's some downside protection with the premium that is generated. So there is some downside protection. It might not be a big downside protection but it will provide some. It will be slightly less volatile than their non covered call equivalents because again of that premium and also the fact that you're capping your upside you're also kind of capping that volatility to the upside but also to the downside with the premium, you don't need to sell principal to get income.

So this one is actually true and not true. We'll go into a bit more detail when we get into the cons here. So I wanted to mention it because it's often an argument that's used by income investor. I've seen it time and time and again on YouTube and that's how you see that they're not either they don't fully understand these products that they're like shelling out to people or they're not being truthful because there's this is not fully true. Anyways, we'll get to it in the cons. It can be more tax efficient and non-registered accounts for than non-concurrent call ETFs. That's because they will oftentimes do a return of capital distribution.

So that's because a return of capital will reduce your tax cause basis. So essentially you don't get tax until you sell those units, but when you do, obviously your cause basis is lower. So you're going to have a bigger chunk of it that will be taxed and it's taxed as a capital gain, which will typically be a lower rate.'s taxed as a capital gain which will typically be a lower rate but again as we've seen last year governments can change the capital gains

inclusion rate they didn't end up changing it in the end but you know you have to be careful because these kind of things can change. It's important to note that not all distributions are done via return of capital, but it can be a mix of things. So it could be some taxable distribution and then return of capital. But if you hold it in a registered account like a TFSA or RSP, this doesn't really matter. But if it's a non-registered account, then yes, there could be some arguments made that it's more tax efficient.

Any comments on that? Yeah, I think just the one thing on return on capital. I mean, you'll have a lot of these funds try to maintain the distribution. So, I mean, in years- We're switching to the cons now, so you can go ahead. To the cons, yeah. Yeah, I mean, in situations where the distribution

might not be able to be maintained through the dividends paid by the stocks they own or the covered call premiums, they might take some money out of the assets of the fund and pay it back to you in return of capital. So especially this will, not in all cases, I mean, I know there is some tax complexities in this in terms of how the actual option income is taxed, but in the event you're seeing high return of capital consistently, especially with declining assets, it can kind of be a sign that the distribution might not be sustainable. But yeah, that's all I had on that.

Yeah. Yeah. And just to simplify, so if people are kind of confused by what Dan said, what is just mean is a lot of the time, they'll try to keep the distribution or dividend like payment that they do, whatever you wanna call it, but it's usually called distribution for an ETF constant. But depending how the market is going,

the premiums that you can get on those call options will not always be the same. So those premiums will fluctuate and of course a dividends paid out by the company sometimes can be cut, sometimes can stop to increase, like whatever it is. So there is some variability there. So if you want to keep your distribution constant, but the two inputs that will allow you to do those distribution can be volatile, can go up and down. Well, when it goes down, you have to get that capital from somewhere

so you end up taking assets out of the fund to pay that distribution, which end up getting into an issue because essentially what they're doing when they do that is they're selling your capital to get income. And that goes back to the argument that one of the pros is you don't need to sell principal to get income. Well the funds actually in those situation, not always, let's be clear, it's not always

and some funds might do it a little bit just when needed. Some other funds might do it more consistently, but when they do it, they are literally selling your principal to pay out income. So it kind of goes counter to that argument that you have all these YouTubers that are all in on these funds and they say like, well, it doesn't matter that my value of my funds go down because I'm just in it for the income. Well, maybe the value of your fund is because it's going down because they're actually Selling your principal

You're not doing it and people think they're not doing it, but they don't realize that the fund is doing it for them Sometimes yeah. Yeah, and there's there's a lot of funds that actually Have very good execution in regards to you know, selling these call options and and distributing income I mean, I won't go over any individual funds in this, but there's also some funds that are exceptionally bad and have kind of eroded a lot of value for investors. Yes, they've maintained that yield,

but effectively the unit price of the ETF has kinda gotten kicked and you're getting that income. But realistically, I mean, again, the income is one portion of total return. No matter how you want to spin it, no matter what mentality you want to take, I mean, if a fund pays you 10% a year, but it loses 15% in share value every year, I mean, you're not getting ahead. You're getting that income. Yes, you value every year. I mean, you're not you're not getting ahead. You're getting that income. Yes, you can. You can kind of try to avoid, you know, you can say that you don't care

about the underlying value, but eventually that will catch up to you. Yeah. You know, it's you. You can't just, you know, take a realized like 15 percent return from a fund and expect, you know, it to be sustainable over the longterm or else, like I said, we discussed this before, everybody would be doing it. I mean, if you could actually sustain those high rates of withdrawal and income, I mean, everybody would be doing it,

institutional investors would be doing it. But yeah, there's a lot of funds that are good at what they do in regards to this, but there's also a lot of funds that are taking advantage of the popularity of these funds and are creating a lot of very, very poor investments for investors who are, I mean, to be blunt, just looking at the yield, they don't really care about the underlying capital, which might serve you well over the short term, but eventually,

it's gonna catch up to you. Yeah, exactly. So, and now looking at the fact that you're capping your upside is one of the big downsides or cons here, because I'm showing here for a joint TCI subscribers. So ZEB, that's ZB MOE equal weight ETF, and ZWB, it's's the equivalent but it's actually the covered call ETF so essentially you know you're looking at ETFs that you

know aside from the covered call they should like they should perform the same but what you look is what you see is over the last five years the non covered called as perform a hundred and 148% and the covered call option as perform 104% in terms of total returns. So you factor in the distributions here. So you've really, that's a big, big difference. And these are also, you can make a case that you're not capping your upside that much when you have a covered call ETF on banks

because banks are not, they don't get these crazy run ups like you can see with like names from the QQQ for example. And the reason I say that because there are some covered call for these high flying stocks and you're even more at risk of actually capping your upside. The more, you know, the higher volatility the stock, the more you're potentially capping your upside, the more, you know, the higher volatility, the stock, the more you're potentially capping your upside. Yeah. And I mean, if you if you think about it from a total return perspective, like a lot of people kind of think that they need the yield to generate the income, whereas in reality, if you

were to have just bought, I mean, in this case, just bought the underlying non-covered call fund, you could have easily just sold shares to generate income for yourself and actually been in a better position. Yeah. Like overall. Or even just collect the dividend and then sell shares as needed to supplement your income if that's your goal,

and you probably would have done better than this. Yeah, but a lot of people kind of, I think this comes from the like element of compounding where they need to see a growing share count maybe. They don't like to sell off shares, which is, I mean, but effectively like the asset has returned 50% more. It's mental gymnastics. That's what it is. Yeah, it is. I mean, there's no, like,

I think it's just psychological at this point. I think it is Canadians may be more guilty of this, I think, because we've been so sorry, lack of better word high on real estate for so long. And everyone knows someone who has multiple rental units that is getting basically like just income properties and they're just living off of it. I think that has a little bit to do and that's my hypothesis on it that a lot of Canadians love income because there's such disentrenchment of real estate and having seen someone that you know that just,

basically just retired and gets a company managing their properties and lives off the income. I don't know, that's always been my, like the reason I think that Canadians love dividends. Oh, we love dividends, income, period. And I mean, I think like, you know, you're gonna see a lot of articles or like people on X or whatever they talk about, you know, the amount of dividend income they have, you

know, they're generating $100,000 a year in dividend income, like tons of, you know, major publications publish this type of stuff. And you know, a lot of people think they can get there with these types of funds or income investments But I mean a lot of the time what's hidden behind those articles is the fact these people you know They had you know high income salaries Invested a lot and that's why they're generating that income like I've seen plenty of like 25 year olds with $40,000 in their portfolio that are structuring it all with these with $40,000 in their portfolio that are structuring it all with these covered call funds or income investments so that they can accumulate more shares and eventually get to that rate in terms

of income generation. And I mean, it's not going to work. I mean, that investor, if they just focused on total return would be in a much better position. But it's also, there's a lot of information, I don't wanna say misleading, but there's a lot of people who are in a position where they can utilize these funds, retire early, live off the income. The whole story is not being told in terms of how they got there.

And yeah, that's all I have. I think sometimes they also don't fully understand what they invest in. I think that's part of it as well, but let's continue here with the cons so limited downside protection So that's usually that's one of the main arguments, you know gives you downside protection it it will give you some But if you look at the returns oftentimes, it's not that great Why because think about it for a second. When you're thinking about call options, well first of all you're capping your upside like we just explained earlier, but if you think about call options, when the

market is kind of flat or if you're in a bear market, are people feeling bullish? Not as much. So what tends to happen if people are not feeling as bullish? They're not willing to pay as high of a premium to get a call option because the reason when you buy a call option Is because you're bullish on the stock and you think it's going to go up in price and therefore you're going to make money on That call option. That's why you would buy them But if the sentiment is not great That's one of the issues plaguing these funds is they're being faced with lower premiums that they can collect when you're in a kind of sideways or down market.

So it does kind of limit the downside protection that you have. And I've never, I've watched a few YouTube videos of people like kind of, you know, being all in on these funds and that is never something that they talk about. I don't know whether they understand how options covered call option or call options work or not but all like what that ends up resulting is basically you may have two three four maybe five percent less downside versus a 30 percent drawdown than the equivalent securities. But if you look at, you know, you can just look at the charts, usually though, it won't be far off.

So that downside protection is definitely, you know, it's there, but it's not as big as a lot of the proponents for these funds actually make it out to be. Well then when you're you know you get that big drawdown and what do they what do the funds do at the bottom to generate the income they sell options and then on the preceding you know run back up in price you don't realize that full benefit of the run-up and that actually happened quite a bit with bitcoin they had uh there's probably more than one now. I imagine they've made a ton of... I know which one you're talking about. Yeah.

Yeah. Yeah. So I mean, you realized a lot of this downside and then you did not realize all of the upside. And a lot of them, a lot of this happened with the single stock income ETFs as well. Like, I don't even know what the tickers are. I'm trying to look it up, but like Tesla, I believe they have one for Nvidia, MicroStrategy, things like that.

They provided very little downside protection and then ultimately did not provide all that good of returns when the stock price was recovering. No, that's a great point. And especially you have to keep in mind, like I just said earlier, if you're selling call options when the market is nearing a bottom,

chances are that the market is not very bullish at that point. So you're also not getting a super high premium on those call options. Yeah. The other thing that you reference is you're basically betting this is gonna be active management, right?

So you have a fund manager that will be selling those call options and you're basically betting on the fund manager to do a good job because options will vary in price based on volatility, market conditions, duration, etc. And there's an element of active management and if there's not it's not a good fund manager then you can really compound that the fact that you're probably going to be lagging the comparable non covered call ETF. So that's really important. The other reason here is because you're paying higher fees. So these fund managers are active so you end up paying higher fees and the BMO covered call bank ETFs ZWB has a 0.71% management expense ratio versus 0.28% for ZEB, the non-covered call option.

This might not sound like a lot, but 40 basis point, if you invested 100k over 20 years, and let's say you're looking at about 5% returns, you're easily looking at a 15 to 20k difference right there just based on the fees. So it's something to keep in mind. If it was like five basis point, I'd say, okay, I guess the fee is kind of a wash. It's not a big thing. But when you're looking at, you know, 40 50 basis points That can really eat into your returns because you're just not paying that with the equivalent fund. That's not covered call Yeah, and I think ZWB is actually higher because the 71 basis points is just a management expense

And then I think they have the M the MER yeah a quarter point trading expense ratio so I think it's actually closer to to one percent so almost quadruple yeah the fees yeah because I'm sure there's like the trading expense ratio Also on ZDB, but it's probably like five basis points or something. It's probably yeah, I can't imagine It would be very high for fun like that. Yeah, yeah, we don't have it So we're just just kinda guessing here. The other thing here is these funds, they're just, like yes, the AUM is much higher, but if you look at ZEB compared to ZWB,

there's like a 20X difference in volume. So there is much lower liquidity in these kind of funds, which for most investors may not be the biggest issue, but lower liquidity means like bigger spread between bid and ask. So you may want to be careful if you want to buy these funds and put it like a limit price when you do purchases or whether you buy or sell. So that's something to keep in mind because lower volume means lower liquidity. That's just a reality of it.

And I guess the last con here, and I'm sure you'll have something to say after this one, so it's the last con I have. So the false sense of security for investors. And I think that is a big, big one. You highlighted a post on Blossom, which thank you, they've been a long time sponsor of the podcast. I like to go on their platforms once in a while to go see what the sentiment of retail investors is, because I think it's a great platform for that.

After Liberation Day, it was interesting to say the least, but I think it's great for that. And you highlighted a post so this person We won't say it's who because yeah, I don't want to throw them under the bus obviously, they're trying to to set themselves up for retirement, but This person they're not that far off from retirement. I think they're in the early 50s if I remember correctly and They he started to withdraw at,000 a month on a roughly $50,000 TFSA which equals to more than a 20% withdrawal rate on an annual basis. All the money is in covered call ETFs and apparently generates 30% yield which is just

wild but anyways some of these ETFs are leveraged, which obviously increases the risk because I saw some of the ETFs and they do have leverage. I mean, you don't get to 30% with just a plain covered call strategy. You have to leverage that stuff to get there. The poster believes it can be sustainable. So the poster, the person doing this on Blossom said he thinks it can be sustainable, wants to do kind of a case study. Look, I think it's pretty clear this might be sustainable for like a year or two but definitely not long term and like we mentioned earlier there's just a high risk of this like ending up really badly like it's too bad but it does give people this false sense of security. The funds they they just don't do as well. Like most of them, the vast majority will just underperform the ETF they're mimicking that doesn't have the covered call strategy. And with the 30% yield, I can guarantee you that some of it, if not a big chunk of it,

will be through the form of return of capital, which means that the value of the fund units will be getting some pressure down, some downward pressure. It may not go down because there might just be enough of gains to offset that with the actual underlying assets, but it's very hard to see this not ending very badly. And that's the core issue I think with these funds and the intense marketing behind it is that more novice investors see this yield and they think it's guaranteed they'll see all these youtubers and They'll think it's just like set in stone. This can go on forever But the reality is market conditions vary. The premiums that you can

get from these covered calls can vary. If you're adding leverage you're increasing the risk as well. Like there's all these different kind of variables that unfortunately I don't think a lot of proponents of these ETFs will be upfront about, truthful about, or maybe they just are not fully, they don't fully understand the product. And I guess my final thoughts on it, and I'll give you the chance, sorry, it's been a bit long, I know you want to talk here, Dan, but I think it's not necessarily, look, it's not a scam or anything, like you're still, you know, they're getting the fees, that's one thing. It's not a scam or anything like that, but I think it's something that, look, if you wanna generate additional income

and you like getting higher yields that can be achieved with these covered call ETFs, and you really want to invest in them, then maybe just do a smaller portion of your portfolio. At least, you know, you get that income, you get overall more income with your portfolio I don't think it's the best strategy But I think it's a better strategy than going all in on these funds

So it like I've said time and time again on the podcast doesn't have to be an all or nothing If you want to do that if you have larger sums of money And you can actually be strategic and want to generate income Then you may want to look into on how to do your own covered calls with some of the underlying securities that you have. Then you can be way more strategic. You can do it when it makes sense. You can do it on the securities that you want to do it on. Maybe it's a stock that you've wanted to, you're kind of on the fence of selling. So you're like, you know what, I don't mind if I sell it. Maybe it's a stock that you've wanted to, you're kind of on defense of selling.

So you're like, you know what, I don't mind if I sell it. I'll put a covered call on it. That's a bit higher. If I end up sending in for that price, I'm happy. I wasn't in love with it anyways. If not, I get the premium. Like that is a reasonable approach, but because call options are in lots of a hundred, you need to probably have a portfolio that's on the larger side to be able to do that. Yeah, especially when you get into the more expensive stocks. I mean, in terms of this, like, case study, I kind of commented on there and I kind of told them don't even bother testing this.

Like, it's, I can almost, well, no, I can guarantee that this is unsustainable over the long term. Oh, yeah. I mean, that this is unsustainable over the long term. I know yeah, I mean The only uncertain thing is how long I? Yeah, the thing is is like you could back test this so it's kind of like he's trying to wonder if if this is worth You know if it's gonna work in retirement and this could work for a year. It could work for for two years I mean it all depends on the direction of the market. But I could tell you right now, if there was a portfolio,

any sort of investment makeup that could sustain a 30 or 20 plus percent withdrawal rate, everybody would be doing it. Like it's just, you know, the market, you look to the past returns of the market for the last century is what? 8 to 10% a year. So, I mean, you're trying to execute a 20% plus withdrawal rate.

It just, it just doesn't really, it's just not going to have, you'd have every 40 year old lined up for retirement if this was sustainable. I mean, pulling out 20% of your capital over the longterm. But- Let me show you something that backs this up. If it was sustainable, then when you transfer, so as people know, you have to convert your RSP into a RIF, a retirement income fund, once you hit the year in which you turned 71.

So once you're like the following year, you have to start withdrawing it. There is a reason why the minimum payout percentage is 4% at 65, 5.4% at 72, 6.82 at 80, 10 at 88, 20% 95 and older. Because they know that once you hit 95, you probably don't have 50 years in front of you. Yeah. So you probably have five to ten years in front of you of life expectancy if you're lucky enough to get to that age in good health. There's a reason why these minimum withdrawal charts are like that, because it's not sustainable. Like these higher numbers that you get while you're in your 80s onwards, like even like 6, 7%, like it's starting to not be very sustainable for longer periods

of time. It's fine in this situation because you don't need to get that income for 30 years at that point. Yeah, but I mean, yeah. If a 20% plus withdrawal rate was achievable, I mean, they wouldn't be this low. It's something that can work again over the short term if the markets are fairly bullish, but it's something that won't work over the long term.

And I think, you know, a lot of people structure their portfolios 100% with these funds. And I do think you can get away with it, but there will come a time where it's gonna impact you for sure. Yeah, I mean, I'll be very honest, like especially like, it really, like at the end of the day, it depends where you're at,

but like I've said earlier, I think it doesn't have to be an all or nothing. No. And it can make sense, I guess, in certain situations, if you're in retirement and you just wanna boost that income a little bit, maybe you allocate a little bit of your portfolio to it.

But if you're below the age of 50, I would say, and you're doing this, especially if you're below the age of 40 or even 30, even more so, I think you're really shooting yourself in the foot. Like you are really making it hard to be able to reach your goals by retirement. Yeah, like if you look to if you look to a lot of these funds that existed before the pandemic, like let's look at something like QLD, which is, I believe that's a big NASDAQ covered call ETF.

So if you look at that versus something like qqq like the nasdaq fund, I mean we're talking about over the last 10 years here let me look it up. So QILD has returned 108% where the nasdaq over the last 10 years has returned 411. So I mean our point earlier right like the more volatile the underlying 11. So I mean, our point earlier, right? Like the more volatile the underlying securities or security is, the more you'll lag, you'll lag it because you're capping your upside even more. So, yeah. So 10 years ago, let's say you put a hundred thousand dollars into QILD because you want that

12%. You're getting paid 12 grand a year. Right now this would include, and keep in mind, this would force you to, so this is total return, so this would actually force you to reinvest those distributions so you couldn't even spend them. So $100,000 10 years ago in QILD is $208,000. And that's if you reinvested every single distribution you got paid, whereas if you just bought the NASDAQ, you would have $515,000 and that's if you reinvested every single distribution you got paid. Whereas if you just bought the Nasdaq you would have

$515,000 so imagine the income you could get with imagine the income. Yeah, you could generate from just So this is why like he said like I think when you're older not necessarily focused on Accumulation these funds like in a way makes sense. They lower your volatility a bit, they give you that income. But I mean, I like I said, I've seen plenty of like 25 year olds, 30 year olds who, you know, they get caught up, you know, in this in this passive income craze, they buy these funds because they love the feeling of getting that distribution, accumulating more units, things like that, like they grow their share count. But I mean, man, that's an extra $300,000 over 10 years. Yeah. And I think, yeah. And I think if people are looking into these funds,

I think obviously this is not investment advice, but to me, it makes way more sense to look at sectors that are less volatile because you won't underperform as much as you would versus something like you just mentioned QLD and the QQQ. I think that makes more sense to me because like banks or utilities, like they already give you a relatively high yield so you have that kind of base,

the dividends still pretty high for these and then you can boost that a little bit with the covered calls so I think that makes some sense I mean I still wouldn't do it personally but that makes more sense for the covered calls ETF versus something like yeah the QILD and QQQ that to me just makes absolutely no sense same thing for that Bitcoin yield ETF, whatever, BTCYLD or whatever, something like that. Yeah. Yeah.

Yeah. It's sorry, I was looking up a utility ETF, a covered call ETF. But I mean, yeah, like generally the more volatile, like Canadian covered call ETFs in my opinion actually perform worse because first off, we don't really have a lot of options. Like there's not a ton of volume on options, like companies here in Canada.

So like it gets even worse. Like if we look at a covered call utilities ETF versus an equal weight utilities ETF, I mean the, both of them have been relatively lackluster over, you know, the last decade or so, cause utilities kind of took a bit of a hit when rates went up. But the regular equal weight utility ETF has tripled the performance of the covered call.

And the utility ETF, that's going to be something that pays you a high yield regardless. It's a basket of utilities. You're probably going to be earning 5% on that ETF. So why try to chase, you know, 12% and, and just get crippled over the long-term in terms of performance. Yeah. Look, I mean, I think we've talked about this again, at the end of the day, a lot of it, when it comes to investing is all about trade-offs, right?

There's no free lunch and investing. So if you're looking for distributions that are that high, hey, it's your money. You can do whatever you want with it, like it's your money, but be aware that you're trading off for higher fees. You're trading off with the fund likely selling some of your capital to make those distribution. You're trading off for higher risk because they're likely leveraging to get you that higher yield as well and you're trading off higher total returns. So if you're okay with these trade-offs for higher yields then it might be a product that you're interested in but you have

to remember like it's the same thing right right? Like if you own, like I have a big chunk of cash right now, well, I'm trading off having some, you know, dry powder and some stability and less volatility and being able to balance as there is a really good opportunity. So I'm valuing that more than having the money all invested in the market. And it's a trade off because if the market goes up,

then I will likely underperform because of that cash allocation. So it all comes down to trade offs. Like in investing, it's all about that. There's no free lunch. You have to understand that whenever you take a decision, when something looks too good to be true by itself, it will usually be too good to be

true. There will be either a hidden cost or one that is pretty obvious, but you need to understand what it is. Yep, absolutely. And I mean, I'm quite vocal on these funds. I have been for quite a while and it's more so directed towards the people who might not understand the funds. Like a lot of people come to me and you know,

they kind of get upset with me because they understand the situation these funds present. Like I'm not necessarily talking to those people. Like again, if you, like you said, if you understand the trade off, that's perfectly fine. But there's a lot of people who don't understand the trade off, which is more so, you know, who I'm directing

a lot of my commentary towards. No, I think that's a good point to wrap it up. It's been a longer episode, but I think people can tell we're pretty passionate about the subject. Look, at the end of the day, I think it's pretty clear what we do with our own portfolio. I'm not invested in any of these.

I know you're not either, but it is out there. So it is an option for people. We tried to give as best as we could, like both the pros and the cons, but my personal view is the cons far outweighs the pro. I think you're in the same bucket right here. But then again, look, everyone has their own objectives. So it is one of

the products out there, whether it's right or not for you. We can't tell you that you'll have to figure that out for yourself. So we appreciate everyone listening. Just a reminder, if you're in Calgary, Alberta, out west, or you want to make the trip to Calgary during this stampede, we are having a Calgary meetup for the podcast network. So me, Dan will be there. The guys from the Real Estate podcast, Dan and Nick, will be there as well. Brayden is also taking time from his busy FinChat schedule.

We'll be there as well. So we'd love to see everyone. I think the tickets are very reasonably priced, especially with how everything is expensive nowadays. So $30 the early bird there's a limit limit amount of tickets for the early bird available up until June 1st and then $40 for the regular price after that. So I think it's fair. There's gonna be some food over there. I'm not There's gonna be a cash bar as well some food over there. I'm not sure there's going to be a cash bar as well, but we will have some some food included too. So hope to see the western folks there. We've never had a meetup out west,

so I think we're definitely overdue. And finally see you see in person. I heard you're really tall then. So no, I am not. Everybody can come out and see. I'm slightly below average. OK, OK, that's good. No, it's hard to say. I'm joking because you can't really tell. No, you can't. So Dan told me I was not very tall a few, maybe a month ago. And I was surprised.

I expected you to. I always expect people to be my height. No, I'm only 5 foot 6. OK, so I've got a few inches my height. Yeah, no, I'm only 5'6". Okay, so I've got a few inches on you. That's stretching. That's stretching. Yeah. Sounds good.

Okay, before we start rambling, thanks everyone for listening and we'll talk to you again next Thursday. The Canadian Investor podcast should not be construed as investment or financial advice. The hosts and guests featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.