A strong management team and sound investment process underpin iShares 20+ Year Trs Bd Buywrt Stgy ETF's Morningstar Medalist Rating of Bronze. Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the second-highest quintile among peers.  

 The strategy’s management team earns an Above Average People Pillar rating. The strategy's sensible investment philosophy earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in corporate bonds and has a substantial underweight in debt with 15- to 20-year maturities compared with category peers. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

iShares 20+ Year Trs Bd Buy Str ETF earns an Above Average Process Pillar rating. Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. The main driver of the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The firm's five-year retention rate of 92% also bolsters the rating. 

The investment strategy as stated in the fund's prospectus is: 

The investment seeks to track the investment results of the Cboe TLT 2% OTM BuyWrite Index that reflects a strategy of holding the iShares 20+ Year Treasury Bond ETF while writing (selling) one-month call options to generate income.  The fund will seek to write call options up to (but not exceeding) the full amount of shares of the underlying fund held in the fund (i.e., the short position in the call option is offset, or “covered, and ” by the long position the fund holds in shares of the underlying fund).  

 This strategy's 12-month yield is 19.3%, higher than its average peer's 4.0%. It also has a 3.4% 30-day SEC yield (a measure similar to yield-to-maturity). While a higher yield may deliver more income, it also tends to indicate higher credit risk. The portfolio has a lower average credit rating of AA, compared with the typical peers' AAA and it holds no non-investment-grade assets, similar to its average peer. Strategies with more credit risk may have a higher return, but they are riskier. In terms of long-term interest-rate risk, this strategy is on par with peers. The longer a strategy's duration, the more sensitive it is to shifts in interest rates. This fund, with a 16.7-year duration, is expected to gain 16.7% of its net asset value if interest rates drop by 1 percentage point, and vice versa.

Above Average

Process

iShares 20+ Year Trs Bd Buy Str ETF's strong team drives the strategy's Above Average People Pillar rating. There are four managers listed on the fund: Paul Whitehead, Jennifer Hsui, Greg Savage, Orlando Montalvo. The team is well equipped, with an average of 20 years of portfolio management experience. Together, they manage a total of 10 strategies, with a Bronze asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

People

BlackRock offers compelling options across asset classes and vehicles. It earns an Above Average rating for Parent. 
The firm’s approximately USD 8 trillion in assets under management, as of Sept. 30, 2022, gives it unparalleled scale and influence. It is a market-leading index fund provider globally, and its iShares exchange-traded fund franchise offers a low-cost lineup of core funds that investors can use to build a well-diversified portfolio for dirt cheap. The firm can be more adventurous in its ETF launches than some peers, so not everything it launches is appropriate for the masses. As a result, it is likely to have more ETF closures than peers that stick to the basic building blocks.  
The firm’s active fixed-income and multi-asset efforts also stand out as some of the best in the industry. Those benefit from BlackRock’s commitment to building a first-class risk management system via its Aladdin analytics software. The software is also available for sale to other firms and has proved to be a popular option for competitors, a testament to its usefulness. 
More recently, the firm has shifted its focus to ESG offerings and incorporating ESG across its investment lineup, leading to a political backlash in the United States.
BlackRock isn’t the best at everything it tries to do, but retail investors, financial advisors, and large institutions could all build robust portfolios using BlackRock’s products.

Parent

iShares 20+ Year Treasury Bond BuyWrite Strategy ETF

TLTW uses a fund-of-fund approach to passively track an index that measures the performance of holding shares of the iShares 20+ Year Treasury Bond ETF and writes one-month, out-of-the-money call options against the shares.

The iShares 20+ Year Treasury Bond Buy-Write Strategy ETF has not performed well compared to TLT since long rates peaked in October 2020. As long rates moved lower from their October 2023 highs, TLT outperformed TLTW by a factor of 3x. TLTW is hampered by the low implied volatility of TLT and the systematic strategy it employs to write covered calls.

TLTW: Not The Right Way To Trade Long Rates Or Volatility

"Investment products" offering double-digit yields, such as buy-write or option strategy ETFs, are almost always unsuitable for individual retired investors. The iShares 20+ Year Treasury Bond BuyWrite Strategy ETF has a high yield, but it is not an actual dividend but a return of capital. Today, TLTW's accurate dividend yield is 3.5%. Any gains after that are from option premiums, which must be reinvested to maintain a steady capital base.

TLTW Is For Speculators, Not Income Investors

TLTW's buy/write strategy has led to underperformance, with TLT returning 14% compared to TLTW's 5% since October. This is because TLTW's monthly returns are capped. Modeling long-term yields as short-term yields plus term premium, the 10-year yield has recently reached neutral and is unlikely to decline further. In the long-run, long-term yields are expected to rise due to persistently large government deficits swamping demand for treasuries.

TLTW: Weakness Of Strategy On Full Display

The iShares 20+ Year Treasury Bond BuyWrite Strategy ETF is designed to offer returns similar to holding 20-year treasury bonds while adding income through writing monthly call options. This strategy aims to benefit when bond prices are stable, earning from both the yield of the bonds and the decay of the call options. TLTW has shown a significantly higher 12-month yield compared to the traditional iShares 20+ Year Treasury Bond ETF.

TLTW: Supercharged By High Volume Environment To 19.85% Yield

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Credit Suisse X-Links Silver Shares Covered Call ETN

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Credit Suisse X-Links Crude Oil Shares Covered Call ETN

Imagine stocks or funds that pay-out their dividends once-a-month! Unlike waiting for quarterly, semi-annual or (ugh) annual payouts, your angst awaiting money is reduced by 300%, or more!. These January U.S. exchange-traded monthly-paid (MoPay) dividends, upsides, and net-gains include: 1. Stocks by-yield (83); 2. Stocks by price-upside (30); 3. Closed-End-Investments, Exchange-Traded-Funds & Notes (CEICs/ETFs/ETNs) by-yield >10.4% (80). Items: 1. Top MoPay stock gains; 2. Overall best MoPay gainers; 3. Funds vs. Equities; 4. Fund risks/rewards. All per prices as of 1/11/24.

January's 83 Monthly Paid Dividend Stocks And 80 Funds

TLTW invests in long-term treasuries and sells covered calls on its holdings.

TLTW: Still Too Risky, Even With A 19.9% Yield

The iShares 20+ Year Treasury Bond BuyWrite Strategy ETF is a good option for investors seeking income from call option sales while sacrificing capital gains. TLTW has underperformed recently due to volatility in the TLT, but conditions are now favorable as real yields are elevated and yield pressures are more evenly balanced. The main risk is sustained fiscal deficits which could cause a surge in inflation, but the Fed is likely to suppress yields if they threaten to undermine fiscal stability.

TLTW: Bond Volatility Should Ease In 2024

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Amplify Transformational Data Sharing ETF

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Manager Directed Portfolios - iM DBi Managed Futures Strategy ETF

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iShares Core MSCI Emerging Markets ETF

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AdvisorShares Pure US Cannabis ETF

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Invesco QQQ

SPDR S&P 500 ETF Trust

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Vanguard Short-Term Inflation-Protected Securities ETF

Vanguard FTSE Emerging Markets ETF

SPDR S&P Biotech ETF

Technology Select Sector SPDR Fund

Hello! This is MarketWatch reporter Isabel Wang bringing you this week's ETF Wrap. In this week's edition, we look at ETF strategies that have exploded in popularity in 2023, and whether they will continue to gain momentum in the year ahead.

These ETF strategies were big winners in 2023. Here's where one CFRA analyst sees them going next year.

Banco Macro

YieldMax COIN Option Income Strategy ETF

PennantPark Investment

Prospect Capital

Simplify Volatility Premium ETF

Imagine stocks or funds that pay out their dividends once a month! Unlike waiting for quarterly, semi-annual or (ugh) annual payouts, your angst awaiting money is reduced by 300% or more! These December U.S. exchange-traded monthly-paid (MoPay) dividends, upsides, and net gains include: 1. Stocks by yield (79); 2. Stocks by price upside (30); 3. Closed-End-Investments, Exchange-Traded Funds & Notes (CEICs/ETFs/ETNs) by yield >9.5% (80). Items: 1. Top MoPay stock gains; 2. Overall best MoPay gainers; 3. Funds vs. Equities; 4. Fund risks/rewards. All per prices as of 12/8/23.

79 Monthly-Paying Dividend Stocks And 80 Funds For December

iShares 20+ Year Treasury Bond BuyWrite Strategy ETF has an 18% yield, but it comes with risks associated with the buy-write strategy. The fund restricts participation in market gains above the strike price and exposes investors to potential losses during market downturns. TLTW's yield may not consistently offset share price declines, and declining volatility in 2024 may reduce buy-write strategy premiums.

TLTW And The Issues With Buy-Write Strategies

The iShares 20+ Year Treasury Bond BuyWrite Strategy ETF offers enhanced income, diversification, and easy access to the U.S. Treasury market. TLTW is concentrated in the duration factor, meaning it responds more significantly to changes in interest rates compared to other fixed income ETFs. TLTW's covered call strategy provides a ceiling on price gains, additional income, and some downside protection, but may limit capital gains in a declining rate environment.

TLTW: A Subpar Idea When Interest Rates Are Set To Normalize

iShares Core U.S. Aggregate Bond ETF

iShares iBoxx High Yield Corporate Bond ETF

Ishares High Yield Corporate Bond Buywrite Strategy ETF

iShares Ibonds Dec 2032 Term Corporate ETF

iShares MSCI USA Quality Factor ETF

iShares 20+ Year Treasury Bond ETF

The U.S. ETF industry continues to evolve. In the first 10 months of 2023, fixed income ETFs gathered more than 40% share of the net inflows, despite representing just 20% share of the market.

Recapping BlackRock's Strong Fixed Income Flows

iShares by BlackRock has introduced the TLTW ETF, which invests in TLT and uses an option overlay strategy to generate additional income. TLTW has experienced a decline in value due to higher treasury yields, but may be finding a bottom as yields start to sell off. TLTW is a speculative investment that is dependent on the Fed's actions, but could provide a double-digit yield for investors.

TLTW's Covered Call Strategy On Bonds To Generate 18% Is Speculative But Interesting

The iShares 20+ Year Treasury Bond BuyWrite Strategy ETF declined by over 8% due to increased treasury bond issuances and rising yields. The Treasury Department's Quarter Refunding (QRA) may act as a liquidity booster for financial markets, leading to a neutral outlook on TLTW. The longer-term fiscal situation for the U.S. government remains concerning, with interest expenses projected to reach 4.5% of GDP by 2033.

TLTW: Raising To Hold On Treasury Surprise (Rating Upgrade)

ProShares Bitcoin Strategy ETF

Gladstone Capital

Gladstone Commercial

PIMCO Dynamic Income Fund

PennantPark Floating Rate Capital

Imagine stocks or funds that pay out their dividends once a month! Unlike waiting for quarterly, semi-annual or (ugh) annual payouts, your angst waiting for money is reduced by 300%, or more! These October U.S. exchange-traded monthly-paid (MoPay) dividends, upsides, and net-gains include: 1. Stocks by-yield (82); 2. Stocks by price-upside (30); 3. Closed-End-Investments, Exchange-Traded-Funds & Notes (CEICs/ETFs/ETNs) by-yield >9.5% (80).

82 Monthly Paying Dividend Stocks And 80 Funds For October

Amplify CWP Dividend & Option Income ETF

JPMorgan Nasdaq Equity Premium Income ETF

WisdomTree CBOE S&P 500 PutWrite Strategy Fund

Global X NASDAQ 100 Covered Call ETF

Global X Russell 2000 Covered Call ETF

In a quest for higher yields amid increased volatility in the stock market, investors are flocking to ETFs utilizing covered-call strategies, resulting in a notable uptick in fund inflows.

A Guide to Covered Call ETFs

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

The iShares 20+ Year Treasury Bond Buywrite Strategy ETF offers investors the ability to add a passive buy-write options overlay to their position in 20+ year bonds to increase current income. TLTW has a dividend yield of 18.32% and distributes dividends monthly, making it an attractive option for income investors. The options overlay used by TLTW reduces counterparty risk and assignment risk, but lacks the flexibility and responsiveness of active management.

TLTW: Income Opportunity In An Uncertain, Bloody Bond Market

Growing fears over the government's ability to pay its debt due to a large budget deficit and heavy Treasury issuance has pressured bonds. The iShares 20+ Year Treasury Bond Buywrite Strategy ETF offers a way to generate income and potentially benefit from higher rates. TLTW has outperformed the iShares 20 Plus Year Treasury Bond ETF and has a strong liquidity rating, but caution is advised due to the bearish technical chart and seasonal trends.

TLTW: Implied Volatility On The Long Bond Jumps, Risk Remains High

The iShares 20+ Year Treasury Bond Buywrite Strategy ETF overlays a buy-write strategy on TLT via call options. The funds write one-month call options that are 2% out of the money. The fund has outperformed TLT by roughly 5% in the past year, given the move lower in bond prices.

TLTW: There Is No Bang For The Buck

Future decreases in interest rates and controlled inflation support the equity value of existing treasury bills. This makes investing in TLTW an attractive proposition. Slow growth in the economy allow covered call strategies to improve yields. Given a slow movement of a underlying, a covered call strategy will outperform.

TLTW: A High Yield Bet On Strong Treasury Outlooks

TLTW has outperformed TLT since its inception, but its performance may not tell the whole story as we have only seen a period when yields went up. The Federal Reserve's 'higher for longer' policy and large treasury issuances pose risks to long-duration bond funds like the TLT. TLTW is structurally disadvantaged due to trading upside for premium income, and long-term bond yields are unlikely to decrease significantly in the near future.

TLTW: Tactically Bearish Bond Funds (Rating Downgrade)

Quadratic Deflation ETF

Kraneshares China Internet And Covered Call Strategy Etf

Modiv

PIMCO Dynamic Income Opportunities Fund

SL Green Realty

Yieldmax Tsla Option Income Etf

Imagine stocks or funds that pay out their dividends once a month! Unlike waiting for quarterly, semi-annual or (ugh) annual payouts, your angst waiting for money is reduced by 300%, or more! These August U.S. exchange-traded monthly-paid (MoPay) dividends, upsides, and net-gains include: 1. Stocks by-yield (85); 2. Stocks by price-upside (30); 3. Closed-End-Investments, Exchange-Traded-Funds & Notes (CEICs/ETFs/ETNs) by-yield >8.74% (80). Items: 1. Top MoPay stock gains; 2. Overall best MoPay gainers; 3. Funds vs. Equities; 4. Fund risks/rewards. All per prices as of 8/15/23.

85 Monthly Paying Dividend Stocks And 80 Funds For August

Fitch downgraded U.S. debt from AAA to AA+, but Matthew Tuttle and Rob Isbitts don't believe it will have a significant impact. The yield curve is inverted, signaling a potential recession - will it lead to a soft landing?

Navigating The Bond Market: Yield Curve, Options And Investment Strategies From Matthew Tuttle + Rob Isbitts

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July was an impressive asset-gathering month for ETFs. Much of the heavy lifting was done by the industry's largest ETFs.

News for iShares 20+ Year Treasury Bond BuyWrite Strategy ETF ETF (TLTW)