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iShares Investment Grade Corporate Bond BuyWrite Strategy ETF (LQDW)
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Hamilton U.S. Bond Yield Maximizer ETF (HBND)
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iShares 20+ Year Treasury Bond BuyWrite Strategy ETF (TLTW)
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iShares High Yield Corporate Bond BuyWrite Strategy ETF (HYGW)
Q: Please recommend about four to five covered call bond ETFs & is now a good time to invest in covered call bond ETFs. Thanks ... Cal
5i Research Answer:
We would suggest: TLTW, LQDW and HYGW. HBND is on the small side but is an option that trades in Canada.
Covered calls are typically a good option for investors targeting higher income distributions and yields. We think that covered call bond ETFs typically do best in a flat to rising interest rate environment because it benefits from both covered call premiums and rising yields. However, in a declining rate environment bond prices will rise. In a falling yield environment covered call bond ETFs have to deal with both the headwind of declining yields on its bonds and rising prices (underlying getting called away).