Global X ETFs Launches Dow 30 Covered Call & Growth ETF (DYLG)

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Global X ETFs has launched the Global X Dow 30 Covered Call & Growth ETF (DYLG), expanding its Income family of ETF strategies. This new offering aims to help investors diversify and increase portfolio yield potential beyond traditional fixed income options.

Recent market movements in the United States, influenced by the Federal Reserve’s interest rate decisions and economic data on inflation and labor market strength, have led to uncertainty in equities and fixed income markets. With rate hikes potentially stabilizing, investors seek a balance between income and growth potential while capturing market upside in the long term amid elevated volatility.

DYLG employs covered call strategies to offer a diversified source of potential income while mitigating downside risks. Previously, such strategies required investors to trade options themselves, involving complexity and frequent trading. The availability of exchange-traded funds that incorporate covered call strategies now allows investors to efficiently add these strategies to their portfolios. As a covered call & growth strategy, DYLG writes calls on only half of the portfolio, enabling investors to capture half of the upside potential of the underlying index, the Cboe DJIA Half BuyWrite Index.

Rohan Reddy, Director of Research at Global X ETFs, believes that Covered Call & Growth Strategies can be effective in navigating uncertain markets while considering potential changes in Fed rate hikes and a robust labor market. DYLG, by investing in stocks from the Dow Jones Industrial Average, helps achieve a balance between growth and income, offering diversification away from other major domestic indices.

The fund tracks the Cboe DJIA Half BuyWrite Index, which measures the performance of a covered call strategy on a theoretical portfolio of the Dow Jones Industrial Average’s underlying stocks. It involves selling one-month at-the-money covered call options on the Dow Jones Industrial Average, reflecting 50% of the portfolio’s stock value.

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