What You Should Know:

  • Invesco PowerShares sponsors the fund.
  • PBP has an expense ratio of 0.75%.
  • The fund holds 501 securities.
  • Sector allocations include: consumer discretionary 11.0%, consumer staples 10.9%, energy 12.3%, financials 14.3%, health care 11.4%, industrials 11.0%, information technology 20.4%, materials 3.7%, telecommunication services 2.8% and utilities 3.6%.
  • PBP has a 12-month yield of 10.0%.
  • The ETF is up 1.7% over the past month, up 11.3% over the last three months and up 7.5% over the past year.
  • The fund is 0.1% above its 200-day exponential moving average
  • Buy-write strategies “provide option premium income that can help cushion downside moves in an equity portfolio, but buy-writes often underperform stocks in rising markets,” according to the CBOE. “Buy-write strategies have an added attraction to some investors in that buy-writes can help lessen the overall volatility in many portfolios.”
  • The options generate income that can help offset potential losses or boost the fund’s annual appreciation – all good attributes for the income-minded investor.

The Latest News:

  • Covered call U.S. equity funds can generate dividend yields up to three times higher than that of the S&P 500 while providing a cushion during volatile times, reports Emma Dunkley for Citywire.
  • Gary Potter, co-head of the multi-manager team at Thames River Capital, believes that a covered call fund can take advantage of the continued volatility this year.
  • The strategy, though, will not perform well if it is a very bullish market or upward trending, Potter added.

PowerShares S&P 500 BuyWrite Portfolio ETF

For past stories in this series, visit our ETF Spotlight category.

Max Chen contributed to this article.

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