It only seems fitting the ETF industry would encore its 30-year anniversary of existence, by reaching new milestones. With 484 new ETF launches raising in $39 billion in new assets, as of mid-December, ETFs have achieved widespread adoption.
“We’ve already broken the record for number of ETFs launched in a single year,” said Douglas Yones, Head of Exchange Traded Products at NYSE.
“Alt income,” or alternative income ETFs, which include funds that get income from synthetic sources like derivatives, have been among 2023’s most popular ETF categories.
Let’s examine a few ETFs in this arena.
JPMorgan Equity Premium Income ETF (JEPI)
When JEPI launched in 2020, covered call ETFs had around $3 billion in assets. This year alone, investors have poured almost $26 billion into covered call ETFs.
Covered calls are designed to generate cash flow by selling derivatives on the underlying holdings. While the investment strategy limits upside potential gains, it provides cash flow.
Among its peers, JEPI has been a consistent asset growth leader. Roughly half of 2023’s inflows into all covered call ETFs have been taken by JEPI. Moreover, JEPI’s assets have swelled to $30.65 billion, making it the largest covered call ETF in the category.
USCF Gold Strategy Plus Income Fund (GLDX)
Some investors may like gold, but they might not like gold’s lack of yield income. And that’s where the USCF Gold Strategy Plus Income Fund (GLDX) may help.
While GLDX owns assets linked to gold, it aims for yield by employing a covered call strategy. The fund also collects additional income from collateral interest income on its gold holdings.
With its novel income approach, GLDX may solve one of the biggest conundrums facing gold investors; turning their shiny yellow metal into an income generating asset. Owning physical gold in a vault doesn’t provide that sort of advantage.
