An appetite for growth is returning to the capital markets. Investors can take advantage with assets like the Global X Nasdaq 100 Covered Call & Growth ETF (QYLG).

“Growth and the appetite to take on risk returned to the stock and bond markets in June despite inflationary pressures and a slightly more hawkish tone from the Federal Reserve,” an Investor’s Business Daily article said. “Growth, energy, technology and biotech funds were among the best mutual funds and ETFs during the month.”

“The Fed moved up the time frame of a potential rate hike to 2023 from 2024,” the IBD article added. “While this was based on higher inflation expectations, Fed chair Jerome Powell also noted that those pressures were rather transitory. He did not indicate when the bank might start reducing its bond-buying program.”

QYLG is designed to balance upside participation in major U.S. equity indexes by generating additional income potential through covered call writing. The funds invest in the stocks held by their respective underlying indices and write at-the-money monthly index options covering 50% of their portfolio.

The ETF offers:

  • High Income Potential: QYLG seeks to generate income by writing covered calls on the underlying index.
  • Upside Potential: By writing calls on 50% of the portfolio, the strategy allows investors to capture half the upside potential of the underlying index.
  • Monthly Distributions: QYLG expects to make distributions on a monthly basis.

QYLG Chart

Growth Takes the Lead Back from Value

A return to value started early on 2021, but now it appears that growth is beginning to retake the lead.

Looking at the year-to-date chart of both the S&P 500 Growth index and the S&P 500 Value index, the gap in performance was readily apparent in mid-March and mid-June. Heading into the second half of 2021, a renewed faith in growth is emerging—a sign that QYLG could be poised for more upside.

QYLG may be a prime option in today’s low-rate environment in any case. The ETF’s income-generating ability gives yield-seeking investors exactly what they’re looking for.

^IVX Chart

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