Covered-Call ETFs Are Booming. But Not All Yield Is Good
These popular vehicles produce higher income—at a cost. Here’s what to know about the trade-offs, plus one solid choice for investors.
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Show Notes
Daniel Sotiroff, senior manager research analyst for Morningstar Research Services, explains how covered-call ETFs work along with the popular investment’s risks and rewards.
On this episode:
- What are covered-call ETFs, and how do they work?
- Why are retirees and other income investors drawn to these ETFs? What’s making them so popular this year?
- Their yields look very high. What is driving them?
- What types of trade-offs are investors making?
- ETFs are known to be tax-efficient investments. What are the tax considerations for covered-call ETFs?
- Should you hold covered-call ETFs in a taxable or tax-deferred account?
- What’s the optimal retirement account to hold covered-call ETFs?
- Let’s talk about covered-call ETF performance in 2025. What have you’ve seen?
- Which covered-call ETFs do Morningstar analysts consider a solid choice for investors, and why?
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