The Globe and Mail reports in its Wednesday edition that tax-free, high-yield income is likely to grab the attention of many retirees and their advisers, and that is exactly what an increasingly popular strategy entails, utilizing the tax-free savings account (TFSA) and covered-call exchange-traded funds (ETFs). In a Globe special, Joel Schlesinger writes that yields on these ETFs that generate monthly distributions can exceed 10 per cent. However, Dave Holt at Mercer Global Investments in Winnipeg, is not keen on using covered-call ETFs for clients either inside their TFSA or elsewhere. "The best apples-to-apples comparison," he says, is BMO Covered Call Canadian Banks ETF (ZWB) and BMO Equal Weight Banks Index ETF (ZEB), which have performance records exceeding 10 years. Both have the same underlying stocks and allocations, but ZEB does not use covered calls and has a 10-year total return of 10 per cent, while ZWB has an annual return of 8 per cent. "Because there's no free lunch, in the long run, a covered-call strategy at best breaks even with a plain-vanilla ETF holding the same stocks," Mr. Holt says. "The biggest risk is misunderstanding the product," and clients might want to sell the ETF in a down market.