There's even an entire community on Reddit dedicated to this thing. I have to assume most simply aren't looking past the extremely high yield and perhaps don't know what they're buying. These funds seem to be popular among income investors and FIRE folks, but I have yet to see a compelling reason for investors' fascination with these funds. small- and mid-caps) and XYLD for the S&P 500 (U.S. While QYLD uses the NASDAQ 100, Global X also offers RYLD for the Russell 2000 (U.S. So is QYLD a good investment? Probably not. QYLD is popular because this allows the fund to have a distribution yield upwards of 10% that pays monthly, making it attractive to income investors. QYLD charges a fairly hefty 0.60% for this strategy. It's pretty simple nothing proprietary going on. The fund holds stocks in the NASDAQ 100 and writes 1-month at-the-money calls on them. Call options are usually sold to generate income in a flat or mild bear market. The buyer of that call option is hoping QQQ goes up. For example, if I own a fund like QQQ for the NASDAQ 100 and I think it's going to be relatively flat for the next 30 days or so, I might sell a call option on it, for which I receive cash immediately (called the premium). To my knowledge, it is the largest covered call strategy fund with over $3 billion in assets.Īs a brief refresher, covered call writers own the underlying and collect a premium on the option, and the buyer of the call option has the right to buy the underlying at the strike price at or before expiration. QYLD is an ETF from Global X that holds the NASDAQ 100 index and also sells covered calls on it to generate income. Introduction – What Is QYLD and How Does It Work? Sequence of Return Risk in Retirement Explained.The 4% Rule for Retirement Withdrawal Rate – A Revisitation.The 10 Best ETFs for Retirement Portfolios in 2023.M1 Borrow Review (How M1’s Margin Loan Works).8 Reasons Why I’m Not a Dividend Income Investor.How To Beat the Market Using Leverage and Index Investing.What Is a Leveraged ETF and How Do They Work?.The 5 Best Emerging Markets ETFs (1 From Vanguard) for 2023.The Best Vanguard Dividend Funds – 4 Popular ETFs.VYM – Comparing Vanguard’s 2 Popular Dividend ETF’s The 5 Best EV ETFs – Electric Vehicles ETFs.The 8 Best Small Cap ETFs (4 From Vanguard).VTI – Vanguard S&P 500 or Total Stock Market ETF? Paul Merriman Ultimate Buy and Hold Portfolio.Factor Investing and Factor ETFs – The Ultimate Guide.How To Invest Your HSA (Health Savings Account).Portfolio Diversification – How To Diversify Your Portfolio.How To Invest in an Index Fund – The Best Index Funds.What Is the Stock Market? How It Works & How to Invest in It. ![]() Beginners Start Here – 10 Steps To Start Building Wealth.
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