It seems logical to tackle the “Buy Write” ETFs once more here being that we have seen a sudden increase in call selling across several well known ETF products in the marketplace.
While not a giant segment by any means in the context of the ETP universe in terms of assets under management, this category is still relatively new and under-recognized by most of the marketplace, and only has room to grow in terms of fund sizes and variety of fund offerings and strategies.
PBP (PowerShares S&P 500 BuyWrite Portfolio 0.75%) is the senior member of this realm, having debuted at the end of 2007 and having amassed approximately $366 million in AUM since inception. An ETF issuer known as “Horizons” entered the space in mid-2013 with HSPX (Horizons S&P 500 Covered Call ETF, Expense Ratio 0.65%) and later in 2013 with HFIN (Horizons S&P Financial Select Sector Covered Call ETF, Expense Ratio 0.70%).
HFIN likely deserves a look here considering what the fund sets out to do and the interest in XLF call selling that seems to have been building in the marketplace recently.
HFIN however remains considerably smaller than the more senior HSPX ($32 million in AUM) with only $4.2 million in AUM at the moment, but that should not limit one’s consideration.
AdvisorShares is also in this fray with VEGA (AdvisorShares STAR Global Buy-Write ETF, Expense Ratio 2.10%) which debuted in September of 2012 and has managed to attract about $26 million in assets since it started trading.
Finally, BWV (iPath CBOE S&P 500 BuyWrite Index ETN, Expense Ratio 0.75%) launched back in 2007 along with PBP, but it has failed to gain much momentum as the lone “ETN” in this space, which would not be a first with investors in aggregate seeming to prefer an ETF over an ETN where the choice exists.
None of these funds are created equally, and if new entrants to the “covered call selling” or “buy write” space come to market at any point in the future, they will likely be differentiated from the current offerings by strategy, and possibly to a notable extent.
It is worth doing a good deal of individual due diligence on a fund level here in this space, and isolate fund strategy with desired investment outcome based on client profile since these strategies are all unique in their methodologies.
Horizons S&P 500 Covered Call ETF
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