Global X Launches Dow 30 Covered Call ETF, DJIA | ETF Trends

Global X has launched a new ETF that seeks to generate income through covered call writing, which historically produces higher yields in periods of volatility.

The Global X Dow 30 Covered Call ETF (DJIA), listed on the NYSE on February 24 with an expense ratio of 60 basis points, expects to make distributions on a monthly basis. 

DJIA follows a “covered call” or “buy-write” strategy, in which the fund buys the stocks in the Dow Jones Industrial Average and writes corresponding call options on the same index, saving investors the time and potential expense of doing so individually.

DJIA aims to track the DJIA Cboe BuyWrite v2 Index, which measures the performance of a covered call strategy that holds a theoretical portfolio of the underlying stocks of the Dow Jones Industrial Average and writes a succession of ATM covered call options on the reference index. 

The underlying index specifically reflects the performance of the component securities of the reference index, combined with written ATM call options corresponding to the value of the portfolio of stocks in the reference index. The fund invests in the securities reflected in the underlying index, not the underlying index itself. 

The index is a price-weighted index containing equity securities of 30 of the largest U.S.-listed companies.

The top holdings of the fund at the time of inception include UnitedHealth Group (9.14%), Goldman Sachs (6.79%), Home Depot (6.14%), Microsoft Corp. (5.58%), and McDonald’s Corp. (4.93%), according to the firm.

The fund will be managed by Global X’s investment management team comprising John Belanger, Nam To, Wayne Xie, Kimberly Chan, and Vanessa Yang. 

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