Now We own two Covered Call ETFs.
My ROTH IRA now holds two different ETFs that focus on income using covered calls. QYLD is more aggressive and may experience more downside risk. However, it is a larger fund with a better yield. Oftentimes, higher yield is a warning flag for higher risk. NUSI is a much smaller ETF, when viewed from an “assets under management” perspective. It also has a higher expense ratio of 0.68%. But their strategy requires more work, so the higher expense ratio seems fair.
Who Should Buy QYLD or NUSI?
The primary customers of these ETFs would be retired individuals who would like some monthly income for a small percentage of their total investment dollars. I don’t think I could recommend that anyone hold more than 1% in total for these ETFs. In our situation, the combined dollar investment is less than 1% of my ROTH IRA assets.
These ETFs should not be purchased before you consider other ETFs for a more balanced dividend growth diversified portfolio. For that reason, I invest far more dollars in VYM and SCHD. For example, 4.61% of my ROTH dollars are invested in SCHD. In my traditional rollover IRA, SCHD is 0.72% of my IRA assets and VYM is 6.57% of the total IRA account.
I own 100 shares of QYLD and 100 shares of NUSI as a long-term income investment.
Read More about QYLD.
The following is a good Seeking Alpha overview of QYLD.
LINK to SEEKING ALPHA QYLD