NEW YORK, Oct. 5, 2022 /PRNewswire/ -- Global X ETFs, the New York-based provider of exchange-traded funds (ETFs), today announced the launch of the Global X Russell 2000 Covered Call & Growth ETF (RYLG). The fund is Global X's latest addition to its Income family, which offers investors ETF strategies that look beyond traditional fixed income to help increase or diversify a portfolio's yield potential.
The U.S. Consumer Price Index (CPI) rose 8.3% from a year ago in August, down from summer peaks but still stubbornly high. As the Federal Reserve and central banks around the world continue to hike rates to combat this persistent inflation, conditions can make it difficult for traditional equities and bonds to perform. Many investors are struggling to find asset classes that can help them to navigate volatility and manage for interest rate risk while maintaining their income objectives.
Covered call strategies can play an important role in the modern investor's portfolio, offering a diversified potential source of income while potentially mitigating downside risks. Historically, covered call strategies required investors to trade options themselves, a task requiring expertise and frequent hands-on trading. But the availability of exchange-traded funds that incorporate covered call strategies can help investors efficiently add these strategies to their portfolios. RYLG writes calls on only half of the portfolio, allowing investors to still capture half the upside potential of the underlying index.
"As investors weigh the impact of continued central bank rate hikes and stubborn inflation, Covered Call & Growth Strategies can be an effective way to navigate choppy and sideways markets," said Rohan Reddy, Director of Research at Global X ETFs. "This fund leverages Global X's expertise to offer covered calls on the Russell 2000 index of small-cap stocks, helping diversify income portfolios away from traditional sources in an uncertain environment while still allowing investors to capture potential upside."
The fund is designed to track the Cboe Russell 2000 Half BuyWrite Index, which measures the performance of a covered call strategy that holds a theoretical portfolio of the underlying stocks of the Russell 2000 and sells a succession of one-month at-the-money covered call options on the Russell 2000. The covered call options correspond to approximately 50% of the value of the Russell 2000. The Cboe Russell 2000 Half BuyWrite Index reflects the performance of the component securities of the Russell 2000 Index combined with written (sold) at-the-money call options corresponding to the value of 50% of the value of the portfolio of stocks.
RYLG will join the Global X Income suite of over 20 ETFs and more than $17 billion in assets under management.i
Global X ETFs was founded in 2008. For more than a decade, our mission has been empowering investors with unexplored and intelligent solutions. Our product lineup features over 90 ETF strategies and approximately $40 billion in assets under management.ii While we are distinguished for our Thematic Growth, Income and International Access ETFs, we also offer Core, Commodity, and Alpha funds to suit a wide range of investment objectives. Explore our ETFs, research and insights, and more at www.globalxetfs.com.
Global X is a member of Mirae Asset Financial Group, a global leader in financial services, with more than $545 billion in assets under management worldwide.iii Mirae Asset has an extensive global ETF platform ranging across the US, Brazil, Canada, Colombia, Europe, Hong Kong, India, Japan, Korea, and Vietnam with over $80bn in assets under management.iv
Investing involves risk, including the possible loss of principal. Diversification does not ensure a profit or guarantee against a loss. Investors should be willing to accept a high degree of volatility in the price of the funds' shares and the possibility of significant losses.
The fund engages in options trading. An option is a contract sold by one party to another that gives the buyer the right, but not the obligation, to buy (call) or sell (put) a stock at an agreed upon price within a certain period or on a specific date. A covered call option involves holding a long position in a particular asset and writing a call option on that same asset with the goal of realizing additional income from the option premium. By selling covered call options, the fund limits its opportunity to profit from an increase in the price of the underlying index above the exercise price, but continue to bear the risk of a decline in the index. A liquid market may not exist for options held by the funds. While the fund receives premiums for writing the call options, the price it realizes from the exercise of an option could be substantially below the indices current market price.
Carefully consider the fund's investment objectives, risks, and charges and expenses before investing. This and other information can be found in the fund's full or summary prospectuses, which may be obtained at globalxetfs.com. Please read the prospectus carefully before investing.
Global X Management Company LLC serves as an advisor to Global X Funds. The Funds are distributed by SEI Investments Distribution Co., which is not affiliated with Global X Management Company LLC or Mirae Asset Financial Group.
i Source: Global X, as of 9/20/22
ii Source: Global X, as of 9/20/22
iii Mirae Asset, as of September 2022
iv Mirae Asset, as of September 2022
SOURCE Global X Management Company LLC