With our ETF Income Edge service, we discuss, educate, and recommend ETFs from the newish—and rapidly growing—universe of high-yield option-strategy ETFs. With mid-year approaching, I thought it would be a good time to review year-to-date results.
You may recall that the U.S. stock market experienced a rapid and steep decline from mid-February through early April. The major indices declined enough to qualify as an official bear market; however, the recovery since the low has brought the market indexes back up close to the pre-crash record highs. As examples, the NASDAQ Composite Index is 2.9% below its earlier high this year, and the S&P 500 remains 2.2% below its peak.
My returns-tracking database includes 114 exchange-traded funds (ETFs). Of those, 95 have been in existence since the start of the year. About two-thirds (63 of 95) have positive returns for the year.
For the year, the top covered call ETFs are not stock funds. The winners have been ETFs with either Bitcoin or precious metals as the underlying assets. The top ETF, the Simplify Gold Strategy PLUS Income ETF (YGLD), has gained 50%.
The returns of covered call stock funds, using either index ETFs or actively managed portfolios, are mostly lumped together, with low single-digit year-to-date returns. With the major index returns still in negative territory, that’s not bad news, but the returns of 2% to 5% for the year won’t get anyone excited.
I want to highlight a few funds that invest in U.S. stocks, utilize covered call strategies for income, and have outperformed the pack.
The FT Vest Technology Dividend Target Income ETF (TDVI) put up a year-to-date return of 11.68%. This ETF has a current distribution rate of 8.14%.
The YieldMax Target 12 Semiconductor Option Income ETF (SOXY) returned 7.22% for the first half of the year. The SOXY distribution yield is 12.27%.
The REX AI Equity Premium Income ETF (AIPI)—one of my favorite ETFs—is a recommended ETF for the ETF Income Edge portfolio. Year-to-date, AIPI is up a middle-of-the-pack 1.95%. However, since the bear market bottom in April, this ETF has gained 27.95%. It was an excellent pickup for investors willing to buy when fear ruled the market.
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