Covered-Call ETFs Are Booming. But Not All Yield Is Good

Daniel Sotiroff, senior manager research analyst for Morningstar Research Services, explains how covered-call ETFs work along with the popular investment’s risks and rewards.

On this episode:
• What are covered-call ETFs, and how do they work?
• Why are retirees and other income investors drawn to these ETFs? What’s making them so popular this year?
• Their yields look very high. What is driving them?
• What types of trade-offs are investors making?
• ETFs are known to be tax-efficient investments. What are the tax considerations for covered-call ETFs?
• Should you hold covered-call ETFs in a taxable or tax-deferred account?
• What’s the optimal retirement account to hold covered-call ETFs?
• Let’s talk about covered-call ETF performance in 2025. What have you’ve seen?
• Which covered-call ETFs do Morningstar analysts consider a solid choice for investors, and why?

Read about topics from this episode.
Should You Own a Covered-Call ETF Like JEPI? (morningstar.com/funds/should-you-own-covered-c…)
Is It Time to Reconsider Dividend Funds? (morningstar.com/funds/is-it-time-reconsider-di…)
3 Great ETFs for Jittery Markets (morningstar.com/funds/3-great-etfs-jittery-mar…)
Covered-Call and Buffer ETFs: Stock Investing With Less Gain but Less Pain (morningstar.com/funds/covered-call-buffer-etfs…)
Covered-Call and Buffer ETFs: Do the Pros Outweigh the Cons? (morningstar.com/funds/covered-call-buffer-etfs…)
100% Downside Protection ETFs: What’s the Catch? (morningstar.com/funds/100-downside-protection-…)
Our 2025 ETF Predictions: A Midyear Review (morningstar.com/funds/our-2025-etf-predictions…)
Covered-Call Stock Funds Like JEPI Are Popular. Should They Be? (morningstar.com/columns/rekenthaler-report/cov…)
The Active ETFs That Led Inflows During 2025’s First Half (morningstar.com/funds/active-etfs-that-led-inf…)
5 Charts on How Tariff Trouble Rocked US Fund Flows (morningstar.com/funds/5-charts-how-tariff-trou…)
Investors, Be Careful When Buying New ETFs (morningstar.com/funds/investors-be-careful-whe…)
Tax-Efficient Retirement-Bucket Portfolios for ETF Investors (morningstar.com/portfolios/3-etf-retirement-bu…)
25 Top Picks for Tax-Efficient ETFs and Mutual Funds (morningstar.com/funds/25-top-picks-tax-efficie…)
How to Maximize the Tax Efficiency of an ETF Portfolio (morningstar.com/funds/how-maximize-tax-efficie…)
3 Great ETFs for an IRA in 2025 (morningstar.com/funds/3-great-etfs-an-ira-2025-2)
The Best ETFs and How They Fit in Your Portfolio (morningstar.com/funds/best-etfs-how-they-fit-y…)

What to watch from Morningstar.
This Dividend Investing Strategy Deserves a Second Look (youtu.be/LbmauGl72ak?si=piv9gvRVJJ5siX_N)
Market Volatility: Is Your Investment Portfolio Ready for a US-EU Trade Deal? (youtu.be/Ju08XVZkxjw?si=F77tmT99xJUaeimI)
Market Volatility: 4 Key Factors to Track in Q3 2025 (youtu.be/5oBnvJG00gI?si=r-gzGB9eLq6QVeyV)
Is the International Outlook Brighter Than the US? (youtu.be/-Sc7rF4jSTw?si=NOFNtCCrsPg-Qx-6)

Read what our team is writing.
Daniel Sotiroff (morningstar.com/people/daniel-sotiroff)
Ivanna Hampton (morningstar.com/people/ivanna-hampton)

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