There are many reasons why people chose to include Covered Call ETFs in their investment strategy, especially when the idea with the investment portfolio is to create a fairly passive side income.
Here are a few examples as to why people invest in ETFs:
- They want to invest in high-dividend stocks and receive a steady stream of income, but they are unable or unwilling to devote the time and resources required to pick the right stocks, and buy and sell them at the right times.
- They are looking for actively managed funds.
- They believe that a flat market is on its way. Covered Call ETFs are known to yield a nice income in a flat or semi-flat markets when it is difficult to make money from traditional stock trading.
- They like the idea of an Index ETF, but want something a bit more spicy and believe that a flat market is around the corner. Historically, the Covered Call ETF has usually beaten the Index ETF during flat and semi-flat market periods.
- They already own a few high-dividend stocks, but want to diversify and not put all eggs in one basket.
- They don’t want to invest in a fund that issues naked options, since such a strategy is very risky.