Fund manager Global X ETFs has expanded its income suite in Europe with the launch of the S&P 500 Covered Call Ucits ETF (XYLU).
The new ETF has been listed on the London Stock Exchange (LSE) and Deutsche Börse Xetra.
The launch of XYLU comes at a time when the US equity market is experiencing slower returns due to the US Federal Reserve’s rate hiking cycle and rising treasury yields.
According to the fund manager, in such an uncertain environment, investors are seeking alternative income solutions, and XYLU offers a covered call strategy, allowing investors to purchase stocks in the S&P 500 index and write covered calls on the index.
This strategy generates steady income during turbulent periods but limits upside participation in the index, said Global X ETFs.
Rob Oliver, head of business development at Global X ETFs in Europe, explained that XYLU provides an opportunity for investors to capitalise on elevated premiums while retaining some upside potential in the US market.
“The US market is at a crossroads as the US Federal Reserve continues to raise rates and 10-year treasury yields increase, and investors are seeking returns in a potentially trendless market,” he added.
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