Global X has launched its first synthetic ETF in Europe, a strategy that writes covered calls on a basket of Nasdaq 100 securities.
The Global X Nasdaq 100 Covered Call UCITS ETF (QYLD) is listed on Borsa Italiana, the London Stock Exchange and Deutsche Boerse with a total expense ratio (TER) of 0.45%.
QYLD synthetically replicates the Cboe Nasdaq-100 BuyWrite v2 index which offers exposure to the stocks in the Nasdaq 100 index.
The ETF is an options-based strategy that sells covered calls on the underlying assets, a process that limits upside participation but offers investors a steady income through premiums.
Covered call strategies, which write call options on the underlying assets they own, are used when volatility is high and investors believe a security will not rise much further.
The firm said strategies such as QYLD can diversify an investor’s source of income away from traditional equities and bonds.
Global X added lowering tracking error and minimising overall costs are the two reasons for synthetically replicating the buy-write index.
Rob Oliver (pictured), head of business development for Europe at Global X, commented: “Amid central banks hiking interest rates, geopolitical instability, and volatile market conditions, covered call strategies can offer investors a critical buffer via elevated premiums
“I am thrilled to announce that Global X is bringing QYLD to investors as part of our growing family of income-based solutions that look beyond traditional fixed income.”