Question 1

How do covered call ETFs work?

Accepted Answer

A covered call is an options’ strategy where the seller of the call option owns an equal amount of the underlying asset. The writer of the option holds a long position on the underlying asset and sells the right for someone else to buy it at a given price, which is typically slightly higher than the current price of the asset. You can find more information here.

Question 2

How is the income or yield generated on the ETF?

Accepted Answer

The yield is generated by selling covered call options on the underlying Bitcoin (or Ether) and collecting the associated premium.

Question 3

Do I only get the yield or also the upside from the underlying ETF?

Accepted Answer

The fund sells covered call options on a portion of the portfolio (Bitcoin or Ether), which means investors will participate in most of the upward price movement while generating a yield from option premiums.

Question 4

How will the yield from BTCY (and ETHY) be taxed?

Accepted Answer

The premiums received on covered call options are taxed as capital gains.

Question 5

What is the frequency of the distribution?

Accepted Answer

The funds will have a monthly distribution schedule.

Question 6

Does this ETF hold “spot” crypto?

Accepted Answer

BTCY and ETHY hold Purpose BTCC and ETHH, respectively, providing exposure to the spot price of Bitcoin (or Ether) without using futures contract.

Question 7

Am I allowed to invest if I’m located outside Canada?

Accepted Answer

We allow our products to be invested in from anywhere in the world. For investors located outside of Canada, we recommend reaching out to a local brokerage or investment advisor to learn more about the specifics of your situation.

Question 8

Will the DRIP yield be enough to buy a share?

Accepted Answer

While we cannot guarantee future performance, mutual fund units offer the opportunity to reinvest fund distributions back into the fund without having to buy a whole share (unlike ETFs).

Question 9

Can I convert my existing Bitcoin/Ether to any of the crypto funds?

Accepted Answer

Currently there is no in-kind option to convert existing Bitcoin/Ether holdings to one of Purpose’s crypto funds.

Question 10

What is the minimum required investment amount?

Accepted Answer

There is no minimum required for the ETF units, all you need is to buy one share. For minimums/requirements on mutual fund units, please refer to the fund facts.

Question 11

Why can I not find the ETF on my brokerage account?

Accepted Answer

We do not limit or restrict investment into our funds. For more information on this issue, we would suggest reaching out to your brokerage.

Question 12

Is your Bitcoin/Ether mined using environmentally conscious methods?

Accepted Answer

We purchase Bitcoin from Bitcoin trading platforms and over-the-counter counterparties, such as, Gemini, Coinbase and other government-regulated trading platforms. These platforms may provide more information regarding mining locations and energy sources. However, if you are interested in investing cryptocurrencies without the associated environmental impact, we’ve got you covered. You can check our website for more information on our carbon neutral crypto ETF.

Alternatives—

Purpose Ether Yield ETF