Global X launches three ETFs to boost income

The fund management firm has announced three new covered call funds, with the purpose of enhancing investors’ income potential. 

Global X ETFs’ launch included Australia’s first S&P/ASX 200 passive covered call ETF, in conjunction with the Australian Securities Exchange (ASX). 

The three new products were:

• Global X S&P/ASX 200 Covered Call ETF (AYLD), which would track the S&P/ASX BuyWrite Index;
• Global X Nasdaq 100 Covered Call ETF (QYLD), tracking the Cboe Nasdaq-100 BuyWrite V2 Index; and
• Global X S&P 500 Covered Call ETF (UYLD), which tracks the Cboe S&P 500 BuyWrite Index.

Graham O’Brien, head of equity market sales and equity derivatives at the ASX, noted that buy-writes were the most popular options strategy for Australian investors.  

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He commented: “AYLD aims to enhance income potential and reduce portfolio volatility compared with outright share ownership. As the first options strategy ETF listed over an index, investors can access a long back history of performance by reviewing the index history supplied by S&P”.

Both the QYLD and UYLD funds were previously US-listed and held the title of the two largest covered call ETFs across the globe. 

Blair Hannon, Global X’s head of investment strategy, explained that the fund trio could support investors to balance both portfolio growth and income. 

“We consistently hear how important income is to investors across all age groups. We see options strategies, incorporated in ETFs, as a great entry point for investors to supplement existing income sources like dividends or coupons from bonds,” he said. 

Additionally, Hannon noted that covered call ETFs could mitigate the effects of market declines, providing investors with potential protection against drawdowns. 

He added: “Alternatively, a satellite portfolio holding can be used to generate an alternative source of income, especially in times of heightened volatility or rising interest rates.”