Global X Funds - Global X Russell 2000 ETF

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Global X Russell 2000 Covered Call ETF

RYLD tracks a market-cap selected and weighted index along with call options for the underlying index.

RYLD tracks the Russell 2000 while systematically selling monthly at-the-money covered calls on the index. The Russell 2000 is not a great fit for this strategy due to its tendency to reap gains through sudden, large increases in value rather than gradual growth. Hence, RYLD has suffered severe NAV erosion with the fund down over 30% despite a 55% in the underlying.

Russell 2000 Not A Great Fit In RYLD's Strategy

RYLD employs a covered call strategy on the Russell 2000, offering high monthly income but capping upside potential, making it attractive for income-focused investors. Since inception, RYLD has underperformed the Russell 2000 Index, delivering a 23% ROI versus the index's 52%, mainly due to its strategy's limitations. The fund's high distribution yield of over 12% is attractive, but investors should consider total return, as much of the yield is return of capital.

Steady Cash Flow Or Missed Gains? A Look At RYLD's Covered Call Approach

iShares Russell 2000 ETF

Small cap companies have underperformed their large-cap peers in the past few years as most of them have struggled in a high-interest-rate environment. For example, the S&P 500 index and the Nasdaq 100 have had total returns of over 72% in the last five years, while the Russell 2000 index has returned 57.

RYLD yields 12%, IWM 1.1%: which is the better Russel 2000 ETF?

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The Global X Russell 2000 Covered Call ETF (RYLD) has become one of the most popular small-cap-focused active fund. It has accumulated over $1.4 billion, with $35 million of these funds coming this year.

RYLD ETF: Is this 12% yielding Russell 2000 ETF a buy?

Covered call strategies, like Global X Russell 2000 Covered Call ETF, offer high yields and potential downside protection but may underperform in strong markets. RYLD aims to match the Cboe Russell 2000 BuyWrite Index by buying the Global X Russell 2000 ETF and selling call options on it. Despite its high yield, RYLD has underperformed the iShares Russell 2000 ETF in total returns, though this trend may change with market behavior.

RYLD: I'd Rather Prefer Small-Caps Without The Covered Call Overlay

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Total Return is a percentage measure reflecting the total performance of a fund, incorporating both capital gains and the effect of dividends reinvested over a specific period. Net Asset Value is the value of an investment fund, determined by subtracting liabilities from assets. The fund's per-share NAV is found by dividing NAV by number of shares outstanding. A positive Total Return with a negative NAV performance creates dissonance in my opinion, whereas having both values positive gives a favorable indication of the quality of a fund.

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RYLD has dropped over the last 7 months. Total return has done better, but the fund has only returned about 3.1% annually since inception. We go over why and tell you how we are making income while dodging this one.

RYLD: 2 Alternatives To 12.3% Yielding Covered Call Fund

In September last year, I issued a bearish piece on RYLD arguing that the ETF is structured in a way that inherently limits alpha potential. So far, the investment thesis has played out nicely. Yet, given the flight to value and struggling tech names, it might seem that RYLD's prospects have finally improved.

RYLD: Optically Enticing, But Fundamentally Still Weak

Surrounded by the smoothness of the Tuscan landscape, I have always thought that the pursuit of harmony in human activities is the first step toward happiness. I also chase a balance in investments, seeking to create a portfolio whose securities provide a steady cash flow over time and grow the nominal capital invested.

My 9% Income Portfolio - Harmony In Investment

Russell 2000 implied volatility hits a two-month low, which means less in the way of option premium to be collected from selling upside calls. Small caps continue to struggle relative to large caps, but IWM's absolute chart shows signs of life, suggesting that owning IWM over RYLD today could make more sense. The Global X Russell 2000 Covered Call ETF has underperformed and may not be the best investment option right now given macro conditions, though seasonality is strong ahead.

RYLD: Small Cap Implied Volatility Dips, Not Ideal For Selling Calls

Global X Russell 2000 Covered Call ETF implements a buy-write strategy in the small cap index Russell 2000. The RYLD ETF shows a 2-digit yield, but also a high variability in distributions and a large decay in share price. The covered call strategy was quite effective in 2022, but RYLD has underperformed at least 5 competitors since its inception.

RYLD: Lagging Other Buy-Write ETFs

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For those who invest for dividends, the goal is to look for securities that can guarantee sustainable dividends and distributions over time. Choices about how to deploy the income generated by those instruments are personal and depend on each investor's needs, financial means, and age.

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Total Return is the actual rate of return for an investment over a given evaluation period, typically one, three, five, or ten years. The Total NAV Return is the sum of all dividends/distributions, assuming they are reinvested, plus the change in the NAV of the fund, be it positive or negative. However, managing our portfolio is not only about applying financial rules, because it is not certain that dividends can and will always be reinvested.

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Royce Value Trust has outperformed Global X Russell 2000 Covered Call ETF since the article was written, with RVT up 21.07% and RYLD up 3.60%. RVT's outperformance can be attributed to picking the right stocks and a reduction in the discount to NAV. RYLD's poor performance is due to its mandate to sell covered calls, resulting in value destruction and potential losses in a volatile market.

RVT Crushes Blind Covered Call Selling From RYLD (Rating Downgrades)

Global X Russell 2000 Covered Call ETF sells monthly call options against RUT, an index of US small-cap stocks. RYLD's options strategy limits its upside exposure to the index, resulting in missed opportunities for investors. The return of capital dividends introduces tax implications that are advantageous for some investors, but individual tax situations may vary.

RYLD: A Magnet For Yield Chasers, Not Worth Your Time

From a technical and tax view, covered call ETFs, such as RYLD, do not pay actual dividends but distribute capital back to investors. RYLD often attracts unsuitable investors looking for long-term income strategies, with some forgetting initial capital investments will eventually be lost without dividend reinvestment. Using RYLD as an income strategy is similar to an insurance provider using premiums as personal income, instead of saving for inevitable claims and settlements.

RYLD: Possibly The Worst 'High Dividend' Fund For Retired Investors Today

RYLD, a covered call writing fund, has performed poorly and has a sub 2% annual total return since inception. We explain why that has happened and why the odds of meeting the current yield without NAV depletion is virtually zero. We go over why RVT is a better choice for yield seekers.

RVT's 8.3% Yield Beats RYLD's 15.5%

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Covered Call ETFs: A High-Yield Income Strategy for Investors

Global X Russell 2000 Covered Call ETF is a covered call exchange-traded fund that focuses on small cap stocks and employs an at-the-money buy write strategy with a dividend yield of 13.77%. When considering total returns compared to inflation, RYLD has not kept up with inflation since its inception in 2019. RYLD may not be a sustainable income investment for those living off the income for mid-long periods of time.

RYLD: Inflation First, Dividends Second

The Global X Russell 2000 Covered Call ETF applies a covered call strategy against the Russell 2000 Index and Vanguard Russell 2000 ETF. RYLD has a low net fee expense ratio of 0.6% and holds about 2000 companies, with the largest exposure being VTWO at 34% of the portfolio. Since its inception, RYLD has underperformed the Russell 2000 and other covered call strategy ETFs, which track popular indices.

RYLD: The History Has Shown That The Structure Does Not Function

Many income investors are familiar with Global X Russell 2000 Covered Call ETF and Global X NASDAQ 100 Covered Call ETF. Both funds currently provide ~12% dividend yields, paid monthly. This article will analyze why such yields are not as attractive as they appear on the surface.

News for Global X Russell 2000 Covered Call ETF ETF (RYLD)