ProShares S&P 500 High Income ETF

ISPY

Market cap $1.11B

Looking at your portfolio and feeling a distinct lack of income? Whether those just starting out or those close to retirement, investors of all types can benefit from a little more income coming from their investments.

As 2025 draws to a close, investors and advisors will be considering their tax-loss harvesting opportunities. By selling some investments at a loss, those investors can reduce their overall tax bills next year.

Covered call strategies have become a very popular fund type in recent years. By leaning on the options market, covered call funds offer high levels of income but can limit upside.

For the past decade, exchange trade funds (ETF) that track major stock exchanges have done very well serving as wealth building platforms for millions of investors.

Investors looking to generate income from their portfolio have myriad investment choices, ranging from simple, like buying dividend stocks, to more complex, like using options. If you don't like to complicate your life, you probably won't want to delve into options.

ProShares S&P 500 High Income ETF offers a daily covered call strategy, providing potential for greater upside capture than peers with monthly covered calls. ISPY's lower expense ratio (0.55%) and monthly distributions make it an attractive option for income-focused investors seeking diversification in their portfolios. Compared to XYLD and SPYI, ISPY demonstrates more upside participation than XYLD but less nimbleness than actively managed SPYI, with a current yield near 10.4%.

ETFs with a covered call yield boost component have become popular in recent years.

I am upgrading ISPY to a buy, as it has proven resilient and effective in generating high, tax-efficient income with capital preservation. ISPY writes calls on the S&P 500 index, not individual holdings, making it cost-efficient and allowing for some price growth alongside high monthly distributions. While ISPY underperforms pure S&P 500 ETFs and some higher-yielding option funds in total return, it offers better capital stability and less price decay.

The VIX spiked above 60 during early-April tariff turmoil, creating an ideal time for selling premium and buying S&P 500 call options for risk-seeking investors. Despite high volatility, ISPY underperformed SPY due to a strong rally post-April 7 market low, losing more than four points in alpha since then. ISPY, with a high 11.7% trailing 12-month yield from daily call options, is recommended as a buy, anticipating equity market consolidation and benefiting from covered call strategies.

Consider diversifying your current portfolio with higher-yielding exchange-traded funds (ETFs).