Latest news with #ChadHarmer
Yahoo
29-07-2025
- Business
- Yahoo
U.S. covered call funds attract record inflows as investors seek yield
By Patturaja Murugaboopathy (Reuters) -U.S. covered call funds are drawing robust inflows this year as investors search for higher returns and protection from broader market volatility because of continued tariff risks and geopolitical tensions. According to Morningstar data, U.S. derivative income funds, primarily made up of covered call strategies, attracted a record $31.5 billion in the first half of this year. Till the middle of this month, they secured another $2.5 billion, lifting the total net assets to a record $145 billion, the data showed. Covered call funds generate income by owning stocks and selling call options on them, collecting premiums in return. In choppy markets, like the current one clouded by macroeconomic uncertainty, these options often expire unused, allowing the fund to retain the premium as stock prices typically don't rise enough to trigger a sale. While gains are capped if markets rise sharply, the consistent income stream remains appealing. The JPMorgan Equity Premium Income ETF has offered a 12-month trailing yield of 8.25%, while the JPMorgan Nasdaq Equity Premium Income ETF and the Global X Nasdaq 100 Covered Call ETF yielded 11.5% and 13.9%, respectively, well above the 10-year U.S. Treasury yield of 4.4%. Chad Harmer, founder and chief investment officer of Harmer Wealth Management, said covered call funds have also become more accessible through low-fee ETFs and 401(k) plans. A 401(k) is a U.S. workplace retirement plan that lets individuals invest pre-tax income and continue managing those assets into retirement. The biggest demand is coming from retirees and conservative allocators, as these funds on average pay more than bonds and rise on concerns that broader equity markets may struggle to keep recent gains. "We believe that the substantial rally in recent weeks has already priced in a lot of potential good news, and that investors should prepare for potential market volatility in the weeks ahead,' said Mark Haefele, chief investment officer at UBS Global Wealth Management. Barry Martin, portfolio manager at Shelton Capital Management, said investors are embracing covered call funds not just for cash flow generation, but also to manage portfolio volatility. "It's a powerful shift in how we approach yield and risk management. This year, with the increased volatility, it is especially a good market to sell calls in." (Reporting By Patturaja Murugaboopathy in Bengaluru; editing by Shankar Ramakrishnan and Jan Harvey) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Reuters
29-07-2025
- Business
- Reuters
U.S. covered call funds attract record inflows as investors seek yield
July 29 (Reuters) - U.S. covered call funds are drawing robust inflows this year as investors search for higher returns and protection from broader market volatility because of continued tariff risks and geopolitical tensions. According to Morningstar data, U.S. derivative income funds, primarily made up of covered call strategies, attracted a record $31.5 billion in the first half of this year. Till the middle of this month, they secured another $2.5 billion, lifting the total net assets to a record $145 billion, the data showed. Covered call funds generate income by owning stocks and selling call options on them, collecting premiums in return. In choppy markets, like the current one clouded by macroeconomic uncertainty, these options often expire unused, allowing the fund to retain the premium as stock prices typically don't rise enough to trigger a sale. While gains are capped if markets rise sharply, the consistent income stream remains appealing. The JPMorgan Equity Premium Income ETF has offered a 12-month trailing yield of 8.25%, while the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ.O), opens new tab and the Global X Nasdaq 100 Covered Call ETF (QYLD.O), opens new tab yielded 11.5% and 13.9%, respectively, well above the 10-year U.S. Treasury yield of 4.4%. Chad Harmer, founder and chief investment officer of Harmer Wealth Management, said covered call funds have also become more accessible through low-fee ETFs and 401(k) plans. A 401(k) is a U.S. workplace retirement plan that lets individuals invest pre-tax income and continue managing those assets into retirement. The biggest demand is coming from retirees and conservative allocators, as these funds on average pay more than bonds and rise on concerns that broader equity markets may struggle to keep recent gains. "We believe that the substantial rally in recent weeks has already priced in a lot of potential good news, and that investors should prepare for potential market volatility in the weeks ahead,' said Mark Haefele, chief investment officer at UBS Global Wealth Management. Barry Martin, portfolio manager at Shelton Capital Management, said investors are embracing covered call funds not just for cash flow generation, but also to manage portfolio volatility. "It's a powerful shift in how we approach yield and risk management. This year, with the increased volatility, it is especially a good market to sell calls in."
Reuters
01-07-2025
- Business
- Reuters
Global dividend funds attract inflows on rate-cut hopes and market jitters
July 1 (Reuters) - Global funds that invest in dividend-paying stocks are drawing strong flows this year, following two years of tepid investor demand, as investors seek assets with a stable income while they navigate geopolitical and economic tensions. Higher dividend-yielding stocks have become popular as the technology sector, which was last year's standout performer, lags behind dividend-heavy sectors such as utilities and energy in 2025. Global dividend-focused exchange-traded funds attracted $23.7 billion in inflows in the first half of 2025, the most in three years, according to Lipper data from LSEG. "Consistent dividend growth signals a company's managers are disciplined at capital allocation and confident about future business prospects," said Steve Watson, an equity portfolio manager at Capital Group. "With tariff negotiations likely to linger for months, dividend growers could provide portfolios with a measure of stability when markets become volatile." Sector-wise, energy led the way with a global dividend yield of 4.75%, followed by real estate at 3.7%, utilities at 3.3%, and financials at 3%, according to LSEG data. By region, Europe had the highest dividend yield of 3%, while Asia-Pacific's dividend yield was 2.6% and the U.S. lagged with an average dividend yield of 1.4%. "With policymakers widely expected to trim rates later in the year, the bond side of the ledger could see coupons ratchet lower, while a broad swath of companies still have room to hold or even lift their dividends," said Chad Harmer, chief investment officer at Harmer Wealth Management. "If that script plays out, the income gap should tilt further in equities' favour." The iShares International Select Dividend ETF has gained nearly 26% this year, while the Xtrackers MSCI EAFE High Dividend Yield Equity ETF and the Schwab International Dividend Equity ETF are up around 18% each. In comparison, the MSCI World Index has returned 8.5% year-to-date.
