Global X S&P 500 Covered Call ETF

XYLD

Market cap $3.12B

Covered call ETFs like JEPI, JEPQ, ULTY, and XYLD have done well in the past few years, attracting billions of dollars in assets as investors embraced their high dividends.  JEPI, the biggest covered call ETF, has attracted over $41 billion in assets, thanks to its 8.

Fed's rate cut and hints of more such moves in 2025 spotlight ETFs like SPVU, RTH, SPSM, XYLD, CHAT and HYDR for growth and income plays.

With markets rallying lately due to strong hopes of a Fed rate cut this week, the actual reaction can be muted when the news hits the market. ETFs like QYLD, DIVO, JEPI and XYLD may help balance income and risks.

Global X S&P 500 Covered Call ETF offers a 13% yield, appealing to income-focused investors despite price underperformance since inception. XYLD excels in down markets, provides lower beta and modest alpha, and serves as a risk-reducing, income-enhancing portfolio addition. XYLD is rated a Buy for income, conservative, balanced, and value investors, but less suitable for aggressive or growth-focused strategies.

We aren't even through September, and the S&P 500 (^GSPC 0.47%) has already produced an 11.2% year-to-date total return (dividends included) at the time of this writing. That puts the index on track for its third consecutive year of higher-than-historical gains.

IVVW offers the lowest expense ratio among S&P 500 covered call ETFs and a high TTM yield, but suffers from NAV erosion and variable distributions. The fund's fixed, systematic covered call strategy leads to unpredictable income and lower long-term total returns compared to actively managed peers. IVVW is less tax-efficient, with most distributions taxed as ordinary income, making it less attractive for taxable accounts.

Caring about dividends can increase our returns, but caring about NAV can save our portfolio. Return and NAV protection must go hand in hand, because there can be no sustainable return without protecting the value of the underlying assets. As far as I am concerned, the way to protect my portfolio is to favor only securities with a positive NAV over time.

A nifty dividend duo—with yields of 9% and 12%—is ready for takeoff. Thanks to Uncle Sam's spending bender coinciding with the rise of the machines.

XYLD offers a high 13% yield and tech-driven upside, making it appealing for income-focused investors seeking growth from AI and technology trends. Despite trailing JEPI in size, XYLD's long track record and time-tested performance since 2013 instill confidence in the ETF's future performance potential. The ETF is heavily overweight technology, with major holdings in Nvidia, Microsoft, and Apple, giving it significant AI and tech exposure.

PBP, XYLD track S&P 500 BuyWrite well, but the BuyWrite strategy underperforms the S&P 500 in most market conditions. Volatility levels are too low for effective premium collection, making S&P 500 a poor choice for BuyWrite strategies. Income generation from PBP, XYLD can be simulated by withdrawing capital from SPY, yielding better overall returns at similar tax implications.