YLDW attempts to juice income from value stocks by writing covered calls on its holdings. The fund targets companies trading below their perceived worth while selling call options to generate extra yield on top of dividends.
How It Works
The fund holds a concentrated portfolio of undervalued stocks selected through fundamental analysis, then systematically writes covered calls against these positions. This options overlay strategy caps upside potential but generates premium income that supplements dividends. The managers actively adjust strike prices and expirations based on volatility and market conditions.
Key Features
- Combines value investing with options income for 2.69% yield despite zero expense ratio
- Actively managed covered call strategy rather than mechanical index-based approach
- Brand new launch with no track record but zero fees during initial growth phase
Risks
- Covered calls cap gains if value stocks finally pop — you'll miss most rallies above strike prices
- No performance history and minimal assets mean this could liquidate if it doesn't gather scale quickly
- Value trap risk doubled — stuck in cheap stocks that stay cheap while giving away upside via calls
Who Should Own This
Income-focused investors who believe value stocks are due for a comeback but want to get paid while waiting. Best for those comfortable with options strategies who understand they're trading away home runs for consistent singles. The zero expense ratio makes it worth a small allocation for yield hunters willing to be early adopters.