New Listing

Global X launches covered call S&P 500 ETF

Expanding its range of income ETFs

Theo Andrew

Rob oliver article-image

Global X has expanded its suite of income ETFs with the launch of a covered call S&P 500 ETF.

The Global X S&P 500 Covered Call UCITS ETF (XYLU) is listed on the London Stock Exchange and Deutsche Boerse with a total expense ratio (TER) of 0.45%.

Designed to generate a steady income during periods of volatility, XYLU tracks the Cboe S&P 500 BuyWrite 15% WHT index, a synthetic strategy that sells covered call options with underlying exposure to the S&P 500.

The ETF looks to offer investors an alternative income solution using covered calls, a process that involves selling a call option on a stock that you already own, protecting you on the downside while also limiting returns if the stock rises.

It is also seen as a diversifier from traditional income generators such as dividend-paying stocks and fixed income.

The S&P 500 has returned 17% year to date, but many investors are concerned returns will slow during the second half of 2023, while the Federal Reserve is tipped to resume its rate hiking cycle.

It is the second covered call ETF launched by the group, after it unveiled the Global X Nasdaq 100 Covered Call UCITS ETF (QYLD) in November last year.

Rob Oliver (pictured), head of business development at Global X ETFs in Europe, said: “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.

“XYLU, Global X’s second addition to its income suite of products in Europe, may help investors to capitalise on elevated premiums while retaining some upside potential in the US market.”

The asset manager launched the same strategy in the US in 2013, which now has $2.9bn assets under management.

In February, Global X launched two ETFs also designed to buffer investors from the downside risks of the S&P 500, the Global X S&P 500 Quarterly Buffer UCITS ETF (SPQB) and the Global X S&P 500 Quarterly Tail Hedge UCITS ETF (SPQH).

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