What is QYLD?
The Global X Nasdaq 100 Covered Call ETF (QYLD) is a unique exchange-traded fund that follows a "covered call" or "buy-write" strategy. This means that the fund purchases stocks in the Nasdaq 100 Index and simultaneously sells corresponding call options on the same index. The strategy aims to generate income for investors in a volatile market by selling call options on the underlying stocks. By doing so, the fund receives a premium on the call options, which provides additional income for investors.
QYLD was established on November 12, 2013, and has an expense ratio of only 0.6%. As of August 31, 2023, the net assets of QYLD total approximately $8.08 billion, making it one of the largest covered call ETFs in the market. The ETF is well-diversified, with holdings in a variety of sectors, including technology, consumer discretionary, and healthcare.
One of the most attractive features of QYLD is that it pays dividends monthly, and the distribution yield is about 11.68% (as of August 31, 2023). This makes it an ideal investment for those seeking regular income from their portfolio. Additionally, QYLD is a good way to gain exposure to the Nasdaq 100 Index while still earning income from the call options.
ETF Objective
The Global X Nasdaq 100 Covered Call ETF (QYLD) is a type of exchange-traded fund that aims to provide investment results that match the price and yield performance, before fees and expenses, of the Cboe Nasdaq-100 BuyWrite V2 Index. This means that the ETF invests in a portfolio of stocks that make up the Nasdaq-100 Index, while also selling call options on those same stocks. By selling call options, the ETF generates additional income that can potentially enhance its overall returns. However, it is important to note that this strategy also comes with risks, as the ETF's gains are limited by the premiums received from selling the call options. Additionally, the ETF may not fully participate in any gains made by the underlying stocks if they increase significantly in value, as the call options will limit the ETF's exposure. Despite these potential drawbacks, the QYLD ETF can be a useful tool for investors looking to generate income in a low-yield environment, while still gaining exposure to the Nasdaq-100 Index.
Top Holdings (As of 31 Aug 2023):
| Net Assets (%) | Ticker | Name | Market Price ($) | Shares Held | Market Value ($) |
| 12.03 | AAPL | APPLE INC | 187.87 | 5,174,840 | 972,197,190.80 |
| 9.92 | MSFT | MICROSOFT CORP | 327.76 | 2,446,284 | 801,794,043.84 |
| 5.76 | AMZN | AMAZON.COM INC | 138.01 | 3,375,416 | 465,841,162.16 |
| 4.96 | NVDA | NVIDIA CORP | 493.55 | 812,529 | 401,023,687.95 |
| 3.73 | META | META PLATFORMS INC | 295.89 | 1,019,988 | 301,804,249.32 |
| 3.36 | AVGO | BROADCOM INC | 922.89 | 294,109 | 271,430,255.01 |
| 3.33 | TSLA | TESLA INC | 258.08 | 1,042,503 | 269,049,174.24 |
| 3.29 | GOOGL | ALPHABET INC-CL A | 136.17 | 1,954,169 | 266,099,192.73 |
| 3.28 | GOOG | ALPHABET INC-CL C | 137.35 | 1,932,124 | 265,377,231.40 |
| 2.24 | ADBE | ADOBE INC | 559.34 | 323,525 | 180,960,473.50 |
The reason why I chose QYLD
To diversify my portfolio, I aim to invest in a variety of assets. As I noted in a previous blog post, some of my investments are in ETFs, which cover most of the stocks in the United States. While I invest in growth stocks and wait for them to appreciate, I also want my portfolio to generate dividend income. That's why I chose QYLD instead of QQQ, an ETF that tracks the NASDAQ-100 index.
TL;DR
Overall, QYLD is a unique and attractive investment option for those looking to diversify their portfolio and generate regular income. Its covered call strategy, low expense ratio, and monthly dividend payments make it an excellent choice for long-term investors.
Disclaimer: This financial blog is for educational purposes only and does not provide financial advice.