What If I Wasn't An Income ETF Investor?

本站添加: 2026-05-25

[00:00:00]This content is for educational purposes only and is not financial advice.

[00:00:05]Investing involves risk. Do your own research and consult a professional before investing. What if I took my 100% cover call ETF portfolio and ported it into a different kind of strategy? So, in this video, we're going to unpack a whatif scenario. What kinds of lessons could I take from being a 100% income investor into doing something else? And for me personally, what would that other kind of strategy be? So, if you like a what if scenario like this, let me know in the in the comments below so we can maybe talk about some whatif scenarios and we'll turn this into a series. So, let's get going. So, let us dive into this fun what-if scenario. Now, if I was not an income investor, I would likely return to my roots before I got into income investing. But with a twist, with the knowledge that I have now, this is the direction I would likely go in if I wasn't an income investor. So the things that I'd be porting over from income investing would be things like my uh stance on geographical allocation, diversification, um indexing and leverage. I think those would be kind of the main uh target points for me personally to focus on. I don't think I need to really complicate this too much. Now the products that I wanted to highlight and I'm going to highlight a few ones that are foundational that I would see building a big core around and then satellite positions that I I that I wanted to talk about as well. So when it comes to the core foundational positions that I would likely invest in if I wasn't an income investor, there's no cover call ETFs.

[00:01:57]um these funds by Global X would be I would say my target.

[00:02:03]Uh things like USSL, things like QQQL would be I would say these two right here would be the very first things I go after. Now, why is that? Because I already hold the income versions of these two. I hold the leverage cover call versions of these two funds, QQCL and USCL.

[00:02:24]I'm already familiar with them. I'm already familiar with Global X. So, these would be the two spots I would likely um build a core around at least for my American exposure. Now, the other thing too is all of these all of these plays here are 25% leverage. That's why I'm going after them. I'm not actually interested in um nonleveraged funds. Uh, now that comes because of how familiar I've I've I've become with using internal leverage with ETFs, especially with that income strategy. So, no matter what I do, it's got to have 25% leverage. Has to. I would say it has to do it. The other thing I would be porting over is not just leverage but also my uh strategy around uh geographical diversification.

[00:03:21]Uh I currently do around a 23 US uh focusing on US companies and one-third on Canadian companies. I do this for the biggest reason of all is essentially to hedge away from Canad from American technology and I mean the US R&D around technology is so huge AI I think it's silly not to invest in the US what one thing that's crazy is is I mean investing in Canada continue like capital flight from Canada even just on a retail level is is going down and down and down and down. Look at any chart, it'll show that it's not just the big institutions. It's not just the medium-siz institutions, it's retail as well. So, I'm bucking the trend when it comes to that by keeping a call it a 33% allocation to Canada. I can but again I do this to hedge away from the from the US. I want to hedge away to get um uh diversification on the sector level into things like rail and uranium and pipelines, energy, utilities, uh Canadian technology, uh shoot, I mean Canadian uh financials as well. Uh so anyway, so that would be another one. And that so that one's a big one for me is is 66% roughly in the US and 33% and change in uh Canada. Uh the other bit of diversification I really like is uh the widening or broadening I should say of of funds that offer up you know largecale diversification like you see in USSL with 500 companies. the golden benchmark I would say of the whole world. It's probably the most famous the standards of poor top 500 companies in the US.

[00:05:18]Also NASDAQ 100 companies techn not a pure technology index but and then everything that's rounded out in there has some sort of you know technology branch that it's associated with. But then there's as far as being broad in diversification I also want to be diversified on a concentrated level. So something like equal weight Canadian banks, this is actually a perfect thing for Global X to offer up to someone like me in this sort of what if scenario. Now what I like about this is the Canadian banks are what the tech sectors to the US. This is our tax sector banking.

[00:05:58]Banking has its tentacles in literally everything. Massive capital, infrastructure products, uh projects on the public and private level. the big six banks have an absolute gargantuan monopoly on um the flow of money in Canada. So like it would it would be crazy to me if if a pension fund or uh a group RSP, a company RSP did not have some sort of um allocation to the banking sector here in Canada. Um so having a direct exposure to this sector I think it for me thinking like a a capital appreciation kind of investor this is maybe the only sector I'd invest in. Now currently sectors I invest in Canada because I think they work really well um from an income level but not necessarily when I'm only thinking of compounding capital right socking that money away for the long term. So for me personally I have um I focus on financials with income, utilities with income and energy with income on if for an income investor investing in Canada.

[00:07:13]I see that as a as a strong way of getting diversification in Canada. I like investing in the sectors in Canada from the income level uh and not the index at least on income. But transitioning from income to um to someone with a capital appreciation kind of mindset, I actually think utilities and energy is not at least for long-term buy and hold investing is not something I'm really that interested in. I'm less interested to invest in defensive sectors. [snorts] It makes sense for income because you can still harness the the uh the distributions which I currently do. Uh but um I could see uh this being maybe the only sector I invest in in Canada and then round it out with other sectors in Canada that I I wouldn't have exposure to in this concentrated um financials play here. Uh so I think very simply doesn't need to be complex.

[00:08:19]This would be my core. I would have three indexes and one sector and that's pretty much it. But then the question comes up um okay that that sounds you know perfectly reasonable 25% leverage modest. The only thing I would probably say I would probably get flak for is you know you're now you're you don't have the income generation to cover the the me expenses which is just the total amount of money that it costs to run the fund. you don't have the income component to essentially offset the the me um because like the leverage component is a cost and I know that I would trying to think more like just a regular index investor. These kinds of funds would I would say probably that would be probably a bit of a hurdle to get over when you've never invested in internally leveraged ETFs. Um and then you're thinking about well what is the management fee? What is like the the me or the leverage cost? Well, that's way too expensive. Investing in an index with over 1% but over the long run cash leverage over a long period of time that is going to be your ally, not your enemy. Long-term leverage, long leverage, cash leverage your your friend in the long run. Um, now I know Global X that they Okay, this is their enhanced growth suite.

[00:09:47]And now I don't know why it's not in here. HQL I know they have that which is just a globally diversify like think of XEQT with 25% leverage. They have a version of that. I don't know why it's here. So it makes me wonder what other leverage products they actually have. I'm thinking of this in real time recording this like what other products do they have that is 25% leverage not incomebased. Uh what else do they got?

[00:10:13]So just keep in mind if you're interested in the world, you want exposure to like these indexes, like these developed markets, emerging markets. I'm not interested in these. I don't want those. I only want to focus on North America. So that's why I didn't talk about these ones. Not interested.

[00:10:30]But if you're interested in world exposure, H EQL, 25% leverage, you basically get all this I I think minus like the this sector banking one. Uh but anyway, so but for the sake of the what if, this would likely be my core. Now, let's talk about some satellite positions. I wish I could say these would be like just straight up satellite, but I would I'm going to have to say very lightly like these would be light satellite positions. But um for the sake of a a what if scenario and thinking outside the box uh I I I got to put myself in a in Jordan from a different universe. What might he be thinking? And so what that Jordan from the alternate universe where I'm not an income investor might be looking at Beta Products by Global X. It's just anyway just an offshoot comp ETF company. I guess this is probably the first time I'm reviewing these kinds of products, but okay, what are these things? These are what are called daily or daily reset leverage ETFs. How are those things different from cash borrowed leverage modestly leverage ETFs? Well, these kinds of ETFs are are more geared for shortterm traders, people that have a high absolute high conviction on a trend that's happening that's that's about to play out. So, they take a position in one of these. Now, Beta Pro focuses on indexes and sectors in this regard. Now, why would someone like me say that this would be a light light position? And I and I use that very uh timidly um because if you don't understand how these leverage ETFs work, like if you can't explain it to yourself uh how these work, it's right away it's not for you. I would also say if you're a beginner, if you're someone who cannot handle volatility, these probably aren't for you. If you're someone who struggles to see trends, this is probably not for you. Be more experienced. be able to be confident about the trends that you see.

[00:12:41]Even for me personally, even at the moment, I wouldn't be comfortable investing in any of these things. Uh even at my level, uh because I am much more of a passive buy and hold kind of income investor. And I think that's the key right there. If you identify at all with the word passive in your investing mission statement, these things are probably not for you. But I will I will for the sake of the what if try to see a scenario where alternate alternate universe Jordan might get into these.

[00:13:18]But basically what what makes them different is that they use what are called swaps. Now, swaps in the in the short the shortest description, the easiest way I can I I can um maybe describe swaps is it's basically uh trading performance where an ETF manager trades performance with a bank or a financial institution basically and and and you're just swapping performance.

[00:13:44]That's what that's where the term swap comes from. In the simplest uh way to to describe it would be if you were confronted and you owned a let's just say it would be the easiest thing here.

[00:13:57]I don't know. Let's just say a uh a 3x uh S&P 500 ETF. So let's just say the S&P 500 goes up 1%.

[00:14:10]If you hold this TASPX, you would get 3% on the day. And so the bank would be giving the fund manager uh basically that performance like whatever it went up they're going to give it to the ETF manager and that gets factored into the NAV as best I can describe but it works the opposite way. If the S&P goes down if T spx goes down 1% this fund's going down 3%. That's just because you're using 300% leverage and it's and it's tracking it based on the day. [snorts] And so the ETF manager would have to give up a portion of that NAV in performance to the uh the bank. Now the question you might have, especially if you're a little bit more um you know with it with these kinds of products, you might be wondering, well, if it's about trading performance, doesn't the market go up more over time than it doesn't? like wouldn't the banks be giving up more over time like say with the S&P 500 that's done fairly well over the past 100 years. Uh and using swaps is actually very common but um they have they have ways of of negating that on their balance sheet. That's that's what I have been told and I'm going to link in the description below. I talked to Sai from Tap Alpha because he uses uh swaps and daily leverage with some of his pro income products, TDAX and T6.

[00:15:45]And so that that's actually a really good explainer of exactly what swaps are and how they work. But in in a nutshell, that's you're just trading performance with um ETF manager to a financial institution and but only on the day it has to be settled every single day. So that's why in these perspectuses ETF fact sheets for these kinds of products um they'll say like only meant to be held for the for the day. There's another term uh to be familiar with with these products called path dependency.

[00:16:16]See, the longer you hold something like TSPX, uh the the basically what what happens is you hold for two days, 3 days, it becomes far less correlated to uh the index that it's tracking. And that just has to do with um resetting on a daily basis. So, it it can be a bit of a a mind twist to to get around, but um as I said, I'll link that in description below. uh an excellent interview to to understand these products. So what would Jordan invest in? I I would say if I was to take on a Beta Pro product, it would be something in the energy sector.

[00:16:57]Mainly that would be at that would be probably the closest thing the in a small aspect I'd feel maybe the most okay taking on. I have had a much better success at at as much as I'm a buy and hold investor, I have made some plays in the past on energy and uh I haven't struck out yet on those on those plays.

[00:17:24]So it's just understanding when energy like when does energy spike, when does it fall back and so I feel much more confident investing in something like that than say semiconductors or even the S&P 500 like it yeah it would be something around energy um most likely when energy goes up not necessarily I wouldn't say not necessarily when it goes down but I would I would say I would invest in a two or 3x leveraged energy product before I invest in a -2 um call it product which for those who are wondering like what's a what's a negative -2x meaning that if which is just it's just another mind warp but if if let's just say the S&P 500 goes down 1% on the day if you invested in SPXD you'd actually make 2% on the day so you're making money off the market going down. So that's what I mean by it's a bet. It it really is. You got to have a high conviction in these things. So Beta Pro focusing on indexes, sectors, and and um sort of niche plays like gold miners, semiconductors, things of that nature.

[00:18:42]Now, if you're wanting single companies for your extremely light positions, or at least I should really be talking to myself in this regard, then I'm probably going after, you know, I I can't see a scenario where I'm not interested ever in single tickers. But if if you're interested in, you know, a a daily leverage play on a single ticker, that's Canadian Longpoint probably gets you that. Again, two ETF companies I've never reviewed in the past and but for a what if scenario it's it's it's probably not a bad idea.

[00:19:18]So I unfortunately there really for me there really is no in between when it comes to income. I could I could absolutely define that. Whereas like core position would be your proxy index plays like your HLDS, HD divs, your index plays like USCL, QQCL, your satellite plays maybe which would be the sectors. Think of uh I mean just think of something like an ENCL by Global X since we're talking about Global X.

[00:19:50]Other utility plays out there, other you know um sector plays in financials.

[00:19:55]Those would be what I would consider those would be like the satellite plays.

[00:19:59]So for me, satellite plays play a strong role in my own income strategy. However, moving into indexes, not as interested in those. I'm I would say that I would be going like in this scenario going into leverage indexes. I'd be going way heavier in indexes than I than I am currently as an income investor. But I'd also be going lighter on the the the the satellite play. So that would be the sectors other than something like this.

[00:20:35]And I might could maybe see a situation where maybe I get into maybe one of these things just to just to get my feet a little bit wet with with some of these plays. they do interest me and you know honestly I wish there would be someone in the Canadian space and if there is I mean oh man like make a comment down below but I would love to follow someone who is invested only in leverage ETFs whether it be long leverage like you see here or in stuff like this how they're playing it the closest person I can even think of in this regard would be uh um a friend of mine Todd Akens from Unconventional wealth ideas, but he's American and he uses all kinds of like crazy stuff like yield max and triple leverage index plays and like normal anchor positions, some conservative stuff like that. He has a a very unique strategy as an income investor that's that truly utilizes every tool at the table. But a Canadian who does it, don't know. But if there's someone who is, I mean, the opportunity is there to to grow a channel and and who knows, you could call it daily leverage reset ETF investing or leverage ETF investing or something like that. Go ahead, go use it. Um, because it's not going to be me because I'm not doing that. Now I would also say after after considering this situation there might be even for me as an income investor I wouldn't give up my income strategy wholesale but there could be a scenario where um I do focus on some of these aspects instead of being a 100% income investor maybe I'm a 90% income income investor and go for some of these now why would I do that or what situation could I see myself if I'm not if I'm not switching from in the what if scenario from income over to straight up indexing.

[00:22:36]Um it's maybe it could be a situation where I look at the income I'm making like and let's just give an arbitrary number. Let's just say like like to me if I when I see like people making like say $35,000 a month. I'm like to me I'm like what on earth am I I going to do with that? Sure, I can build more income or, you know, maybe I'll make just enough money, cover my needs, maybe make a little bit more income as a buffer per month. Enough money that that income can now start to swap over into um into maybe capital appreciation style of investments, especially if I if I'm truly in a situation where I am really confident I really don't need this income. I have my income portfolio supporting me over here. I got other income supporting me over here. Maybe it's the day job supporting me. I can I can maybe experiment with um capital appreciators. Now, when hearing that, it's not because Jordan is um is is letting the cat out of the bag that um the indexers the the growth indexers have won the day and that's, you know, I'm I'm seeing the error of my ways here. If that's your position on on on what I'm saying here, that's completely wrong. This is about an evolution.

[00:23:56]Investing should always be an evolution.

[00:23:58]Lifelong leaders are lifelong learners.

[00:24:01]And um you know uh I I take I'll take a scenario like looking at what I did with margin last year and making content on margin. I never thought I would ever invest in margin. And it turns out there was a situation that came up where I'm using a little bit of margin in my portfolio. A little bit. Um, and could there be a situation where I, you know, adapt uh a strategy where I'm only focused on leverage capital appreciators like we see here. Sure, there could be no time soon, but there could be a situation where I incorporate that in there. I don't want to be I don't want to just totally swallow my own dogma here with uh just being a 100% income investor.

[00:24:48]No, I think again investing it's it's a lifelong journey. You got to be open-minded. I could see a scenario where I'm I'm open-mindedness. So, anyways, everybody, if you like this whatif scenario, you want more, let me know in the comments below. Uh, and uh, I hope you had fun with this one. So, hit all the buttons to like and subscribe variety and I'll see you all in the next video.