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Top-Performing High-Income ETFs of Q2: Option Strategy Rules
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Wall Street has delivered a moderate performance in the second quarter of 2024, with the S&P 500 gaining 5.1%, the Dow Jones losing 0.4%, the Nasdaq advancing 8.6%, and the Russell 2000 retreating 2.3%, respectively (as of Jun 25, 2024). Key equity indexes have hit all-time highs in the quarter.
April became the worst month of 2024 for Wall Street due to rising rate worries, followed by a robust upswing in May and June. The ongoing artificial intelligence (AI) craze, recent signs of cooling in inflation, and the resultant Fed rate cut bets, along with strong corporate profit growth, have been fueling investors' confidence in the stock market for the past two months.
High-Income ETFs in Focus
Against this backdrop, we highlight a few winning high-income ETFs that returned handsomely in the second quarter.
Shipping – SonicShares Global Shipping ETF (BOAT - Free Report) – Up 26%; Yield: 10.95%
Global shipping companies are known for their dividend payments. Companies like Maersk, COSCO Shipping, and Mitsui O.S.K. Lines are known for being great dividend paymasters. These companies, with their varied fleets and strategic chartering practices, are well-positioned to offer consistent dividends to their shareholders.
This is especially true given geopolitical tensions in the Red Sea, a crucial area for international trade. The tension sent ocean freight rates higher in recent months and offered a bullish case for global shipping stocks. The fund charges 69 bps in fees.
Option Income Strategy – YieldMax NVDA Option Income Strategy ETF (NVDY - Free Report) – Up 17.49%; Yield 52.2%
ETFs focusing on option income strategy on big tech companies have deserved investors’ attention lately. An option income strategy involves using options to generate regular income from an investment portfolio. The YieldMax NVDA Option Income Strategy ETF is an actively managed fund that seeks to generate monthly income by writing call options on NVDA. The fund charges 99 bps in fees.
India Financials – Nifty India Financials ETF (INDF - Free Report) – Up 11.9%; Yield 7.99%
The underlying Nifty Financial Services 25/50 Index measures the performance of companies in the Indian financial market, including banks, financial institutions, housing finance, insurance companies, and other financial services companies. Stocks included in this ETF are high-income in nature. The fund has jumped this on election hopes. The fund charges 75 bps in fees.
Tech Dividend – FT Vest Technology Dividend Target Income ETF (TDVI - Free Report) – Up 9%; Yield 5.72%
This is another option strategy ETF that won in Q2. The FT Vest Technology Dividend Target Income pursues its investment objective by investing primarily in U.S. ETFs contained in the Nasdaq Technology Dividend Index and by utilizing an "option strategy" consisting of writing(selling) U.S. exchange-traded call options on the Nasdaq-100 Index and/or the S&P 500 Index, or exchange-traded funds that track the Nasdaq-100 Index or the S&P 500 Index. The fund charges 75 bps in fees.
The fund also follows a rules-based, options trading strategy that seeks to produce high income using the Nasdaq-100 Index. Yield enhancement and volatility management are the top two benefits NUSI offers to investors. The fund charges 68 bps in fees.
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Top-Performing High-Income ETFs of Q2: Option Strategy Rules
Wall Street has delivered a moderate performance in the second quarter of 2024, with the S&P 500 gaining 5.1%, the Dow Jones losing 0.4%, the Nasdaq advancing 8.6%, and the Russell 2000 retreating 2.3%, respectively (as of Jun 25, 2024). Key equity indexes have hit all-time highs in the quarter.
April became the worst month of 2024 for Wall Street due to rising rate worries, followed by a robust upswing in May and June. The ongoing artificial intelligence (AI) craze, recent signs of cooling in inflation, and the resultant Fed rate cut bets, along with strong corporate profit growth, have been fueling investors' confidence in the stock market for the past two months.
High-Income ETFs in Focus
Against this backdrop, we highlight a few winning high-income ETFs that returned handsomely in the second quarter.
Shipping – SonicShares Global Shipping ETF (BOAT - Free Report) – Up 26%; Yield: 10.95%
Global shipping companies are known for their dividend payments. Companies like Maersk, COSCO Shipping, and Mitsui O.S.K. Lines are known for being great dividend paymasters. These companies, with their varied fleets and strategic chartering practices, are well-positioned to offer consistent dividends to their shareholders.
This is especially true given geopolitical tensions in the Red Sea, a crucial area for international trade. The tension sent ocean freight rates higher in recent months and offered a bullish case for global shipping stocks. The fund charges 69 bps in fees.
Option Income Strategy – YieldMax NVDA Option Income Strategy ETF (NVDY - Free Report) – Up 17.49%; Yield 52.2%
ETFs focusing on option income strategy on big tech companies have deserved investors’ attention lately. An option income strategy involves using options to generate regular income from an investment portfolio. The YieldMax NVDA Option Income Strategy ETF is an actively managed fund that seeks to generate monthly income by writing call options on NVDA. The fund charges 99 bps in fees.
India Financials – Nifty India Financials ETF (INDF - Free Report) – Up 11.9%; Yield 7.99%
The underlying Nifty Financial Services 25/50 Index measures the performance of companies in the Indian financial market, including banks, financial institutions, housing finance, insurance companies, and other financial services companies. Stocks included in this ETF are high-income in nature. The fund has jumped this on election hopes. The fund charges 75 bps in fees.
Tech Dividend – FT Vest Technology Dividend Target Income ETF (TDVI - Free Report) – Up 9%; Yield 5.72%
This is another option strategy ETF that won in Q2. The FT Vest Technology Dividend Target Income pursues its investment objective by investing primarily in U.S. ETFs contained in the Nasdaq Technology Dividend Index and by utilizing an "option strategy" consisting of writing(selling) U.S. exchange-traded call options on the Nasdaq-100 Index and/or the S&P 500 Index, or exchange-traded funds that track the Nasdaq-100 Index or the S&P 500 Index. The fund charges 75 bps in fees.
All-Cap Blend – Nationwide Nasdaq-100 Risk-Man (NUSI - Free Report) – Up 8.6%; Yield 6.28%
The fund also follows a rules-based, options trading strategy that seeks to produce high income using the Nasdaq-100 Index. Yield enhancement and volatility management are the top two benefits NUSI offers to investors. The fund charges 68 bps in fees.