QQQX: Mixed Signals Ahead For Income Investors

Summary

  • The Nuveen Nasdaq 100 Dynamic Overwrite Fund (QQQX) attempts to combine the best of three worlds for income investing - high dividend, low volatility, and capital appreciation.
  • With a 6.6% dividend yield, it is indeed appealing to investors seeking current income.
  • However, you need to be aware of the uncertainties ahead, particularly surges in volatility and interest rates.
  • The recent volatility spike and expected volatility ahead can help it generate more income but pressure its price appreciation.
  • At the same time, the expected interest rate raises can diminish its real return and increase investment risks.
  • Looking for a helping hand in the market? Members of Envision Early Retirement get exclusive ideas and guidance to navigate any climate. Learn More »

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Thesis

I first wrote about the Nuveen Nasdaq 100 Dynamic Overwrite Fund (NASDAQ:QQQX) on July 25, 2021. That article analyzed the inner workings of QQQX. It took a close look in terms of its

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This article was written by

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Sensor Unlimited is an economist by training with a PhD, with a focus on financial economics. She is a quantitative modeler and for the past decade she has been covering the mortgage market, commercial market, and the banking industry. She writes about asset allocation and ETFs, particularly those related to the overall market, bonds, banking and financial sectors, and housing markets.

Sensor Unlimited contributes to the investing group Envision Early Retirement which is led by Sensor Unlimited. They offer proven solutions to generate both high income and high growth with isolated risks through dynamic asset allocation. Features include: two model portfolios - one for short-term survival/withdrawal and one for aggressive long-term growth, direct access via chat to discuss ideas, monthly updates on all holdings, tax discussions, and ticker critiques by request. Learn More.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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