KNG: Big Yield, Unimpressive YTD Returns

Summary

  • Covered call ETFs have attracted over $25 billion in net flows this year, surpassing the total for 2022.
  • The FT Cboe Vest S&P 500 Dividend Aristocrats Target Income ETF is a veteran ETF in the covered call space.
  • KNG has a hold rating due to its construct, weak relative returns, and significant sector and style wager compared to the broad stock market.
  • I highlight key price levels to watch as 2024 approaches.

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Covered call ETFs have surged in popularity over the past handful of quarters. The notion that investors can earn an outsized yield while having exposure to some upside in stocks is appealing. As interest rates have risen, though, some pundits have called into

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