XYLD - DIVO Is A No-Go: Why I'm Skeptical About This Covered Call ETF
- DIVO is the combination of a concentrated group of 20-25 large-cap stocks plus a strategic covered call-writing option program.
- The fund is actively managed for 0.55% annually and has a trailing distribution yield of 5.14% which can include ordinary income, capital gains, and a return of capital.
- I found some inconsistencies in my analysis of the fund's constituents, and because of this, I don't trust that the fund managers will protect enough capital during a market downturn.
- The target yield of 4-7% may be good enough for income investors, but I would challenge them to see if they can achieve a similar yield with more straightforward passive covered call ETFs.
For further details see:
DIVO Is A No-Go: Why I'm Skeptical About This Covered Call ETF