To be honest, I'm not the biggest fan of these covered call ETFs, particularly ones that have very little history of providing reliable distributions.
This fund has only been around since 2020 and ultimately benefitted from a massive surge of options related activity and volatility that caused options premium's to be extremely lucrative. As such, yields were sky high.
We are already seeing the lull in options related activity taking a toll on the funds distribution as it recently issued 2 of the lowest distributions since its inception. It is trailing the S&P 500 Index in terms of total returns and as we get to a more normal market environment, I cannot imagine options premiums go back to levels witnessed in the pandemic. As a result, it will be harder for this fund to produce the same distributions and we could see yields continue to drop.
We just witnessed HYLD, the Hamilton Enchanced US Covered Call ETF, cut its distribution. I'm saying this because it has done so because there is not enough income coming in from the underlying holdings, one of the largest holdings in the fund being JEPI.
I think there was a lot of blind money that bought these funds during the pandemic assuming the income would be consistent. This is not the case, and we could see a further decline in the future.