Global X S&P 500 Covered Call ETF [XYLD] Stock Forecast

In the days leading up to the holiday weekend, it was fairly quiet in the ETF industry. The most remarkable development in the space was BlackRock's launch of a pair of actively managed equity ETFs on Wednesday.

XYLD recently saw its dividend get reduced. The fund's forward yield drops from 12% to 8%.

In this week's edition of the ETF Issuer League, firms across multiple ETF AUM tiers have reason to celebrate. Shops including Avantis, Dimensional, Mirae's Global X suite, and boutique Summit Investments all hit strong weekly inflows for their sizes.

A buy-write, also known as a covered call strategy, is an investment strategy used to generate income and potentially hedge against downside risk.

Things are a bit more sanguine for income investors this year, though not 100% so, but 2022 serves as a reminder that stocks and bonds can fall in unison.

XYLD yields ~11% and pays a variable monthly distribution. The XYLD ETF uses Covered Calls on the S&P 500 to generate monthly income and offers some downside protection to investors.

The Global X S&P 500 Covered Call ETF performs best when volatility levels are elevated, this fund should outperform if a recession occurs. There are multiple economic indicators that point to a recession being increasingly likely in the next 4-6 months.

QYLD: The Yield Is A Mirage.

Understanding how ETF distributions are categorized can alleviate a lot of hassle and potential headaches come tax season. ETF distributions are varied, as are their tax treatments, and there are several exceptions to each category.

Interest rates and inflation have skyrocketed since early 2022. Asset prices are down across the board. These and other developments have important implications for XYLD and its shareholders.