Amplify ETFs launches ‘YieldShares’ dividend & option income fund

Dec 19th, 2016 | By | Category: Equities

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Amplify ETFs has launched the Amplify YieldShares CWP Dividend & Option Income ETF (Bats: DIVO), expanding its suite of income-oriented exchange-traded fund solutions.

Amplify ETFs launches YieldShares Dividend & Option Income ETF

Christian Magoon, CEO of Amplify ETFs.

The actively managed fund tracks the Enhanced Dividend Income Portfolio, an existing strategy managed in separate account format by DIVO’s Sub Adviser, Capital Wealth Planning. The strategy will combine an investment in 20 to 25 dividend paying stocks from the S&P 500 Index with an opportunistic covered call writing program.

A covered call is an income-producing strategy where an investor sells call options against shares of stock already owned. The investor collects the option premium as income but is exposed to losses on the contract if the underlying stock’s price rises above the call option’s strike price. As such the investor will not realize gains on the stock position above the strike price.

An annual income rate of 4 – 7% is targeted through a combination of dividends and call premiums.

Christian Magoon, CEO of Amplify Investments, commented: “The DIVO launch is part of our long-term objective to build the Amplify YieldShares suite of income-oriented investment strategies. DIVO’s two-fold income approach may help to hedge traditional dividend investors’ portfolios from a rising rate environment.”

The ETF has a total expense ratio of 0.95%.

Amplify ETFs’ suite of income-focused funds also includes the Amplify YieldShares Prime 5 Dividend ETF (Bats: PFV) and the YieldShares High Income ETF (NYSE: YYY), providing exposure to US high dividend low volatility stocks and high yield closed end funds respectively.

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