About YieldSmartTM ETFs
YieldSmart ETFs are advanced covered call options based ETFs — built for today’s income needs and tomorrow’s goals. By implementing carefully crafted options strategies this suite of investment solutions is designed to balance attractive monthly income with long-term capital appreciation, all in pursuit of compelling total return potential for today’s income investor.
Why Use a Covered Call Strategy?
In covered call strategies, option premiums help provide a steady stream of income for sellers while helping offset risks.
An option premium in a covered call strategy is the premium income received by the fund for selling the call option on a security. Its value depends on the strike price, time until expiration and potential price changes (volatility) in the asset.
What Do YieldSmart ETFs Offer?
Attractive and Consistent Income Opportunities
Innovatively designed covered call strategies seek to facilitate a steady stream of income potential through the collection of option premiums.
YieldSmart ETFs offer annual covered call option premiums that range from 4% to potentially over 60%, often providing additional income alongside the dividend distributions.
Aims to mitigate market volatility and deliver growth potential with strategic covered call overlays, using income premiums to help offset potential portfolio downturns while providing growth opportunities.
Total Return Focus Across Asset Classes
YieldSmart covered call ETFs are designed to balance attractive monthly income potential with capital appreciation in an effort to deliver smart, long-term outcomes.
YieldSmart covered call ETFs offer both actively managed and index-based underlying portfolios across various asset classes.
Tax Efficiencies
Utilizing a covered call strategy in an ETF may generate tax-efficient income, largely due to the treatment of options premiums and other strategic considerations unique to the ETF structure.
In some cases, the use of covered calls may help defer taxes, as the premiums received are often treated as return of capital (ROC), which does not immediately incur taxes and instead reduces the cost basis of the holdings.
YieldSmart ETFs combine thoughtful implementation with a focus on tax-efficient overlays, in an effort to optimize investor returns.
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Balance Income & Growth Potential
YieldSmart covered call ETFs utilize a thoughtful research-based approach aimed to balance income and growth.
YieldSmart ETFs seek to achieve this balance by:
Income Focus
Covered Call Options: Earning income off the covered portion of the portfolio.
Dividends: In addition, certain YieldSmart ETFs will also collect dividends on the underlying securities owned by the fund.
Appreciation Potential
Writing covered call options on only a portion of the portfolio (covered portion), which allows for the remaining portion of the portfolio to have full appreciation potential.
Additionally, many YieldSmart™ covered call strategies use of out of the money options (OTM) which leaves more room for appreciation relative to in the money (ITM) or at the money (ATM) options.1
YieldSmart ETFs seek to balance total return when selling covered call options. By utilizing partial portfolio coverage call and/or OTM options, we are offering a combination of income and upside potential.
Many of our strategies also employ a systematic rules-based active management approach leveraging analytics to optimize outcomes. YieldSmart ETFs offer products along the yield spectrum, carefully calibrated to suit diverse investor profiles. These ETFs aim to achieve attractive income generation while retaining opportunities for market appreciation.
Smart Options,
Compelling Results
Built for today’s income needs and tomorrow’s growth goals.
Attractive Monthly
Income
Attractive monthly income potential for investors.
Tax Efficient Income
Distributions
Utilizing a thoughtful covered call strategy in an ETF may generate tax efficient income for investors.
1OTM call options seek to balance growth potential with income generation. ATM call options prioritize income from option premiums with potential growth if the underlying isn’t called away.
ITM call options prioritize income as the underlying is already above the strike price.
Covered call risk is the risk that the Fund will forgo, during the option’s life, the opportunity to profit from increases in the market value of the security covering the call option above the sum of the premium and the strike price of the call, but has retained the risk of loss should the price of the underlying security decline.
This information does not constitute, and should not be considered a substitute for any specific legal, tax or accounting advice. Please consult with qualified professionals for this type of advice.
Distributed by Foreside Fund Services, LLC