Summary
Designed for high current income through aggressive ATM call selling. The trade-off is limited upside participation, which can weigh on long-term total return in strong bull markets.
Core Facts
Underlying
Nasdaq 100
Option Approach
ATM covered call with near-full overwrite
Expense Ratio
0.60%
Launch
2013-12
When It Can Be Useful
More suitable when income priority is high and market expectations are range-bound rather than strongly bullish.
Best Fit
- •High-income oriented allocations
- •Range-bound market views
- •Income sleeve in retirement portfolios
Watch-outs
- •Long bull markets may create large opportunity cost
- •Downside risk still exists in market sell-offs
- •Expense ratio and distribution structure should be monitored