Three high-yield covered call ETFs offer monthly income with capped growth potential.

From Yahoo Finance: 2025-06-19 19:30:00

In 2024, ETF inflows reached a record $1.9 trillion, driving total assets to $14.7 trillion. With U.S. Treasury yields near 4.4%, investors seek higher income strategies. Funds like QYLD, SPYI, and ISPY offer advanced covered call strategies on major indexes, providing monthly income streams and yields exceeding conventional options.

QYLD tracks the CBOE NASDAQ-100 BuyWrite V2 Index, managing $8.38 billion in assets with a 14.13% annual distribution rate, paying out monthly. While offering a robust income stream, it comes with capped upside during sharp rallies. The fund’s expense ratio is 0.6%, down 8.7% year-to-date.

SPYI, managed by NEOS Funds, began trading in 2022, with a 12.65% annual distribution rate. It utilizes a collar effect strategy on the S&P 500 Index, aiming to retain upside potential while providing monthly distributions. The fund has $3.9 billion in assets, with an expense ratio of 0.68%, down 2.4% year-to-date.

ISPY implements a daily covered call overlay on the S&P 500, writing fresh call options daily to maximize premium capture. With a 12.82% annual distribution rate and monthly payouts, it aims to provide steady income with some downside protection. ISPY manages $740.3 million in assets, with an expense ratio of 0.55%, down 7.9% year-to-date.

High-yield covered call ETFs like QYLD, SPYI, and ISPY offer monthly income but may limit growth potential. Given the current volatile investing environment, these ETFs are expected to remain relevant for income seekers in 2025.

Read more: 3 ETFs with Dividend Yields of 12% or Higher for Your Income Portfolio