Defiance launches Russell 2000 daily put-write ETF

Nov 2nd, 2023 | By | Category: Alternatives / Multi-Asset

Defiance ETFs has launched a new actively managed ETF that aims to redefine how investors approach income generation in the US small-cap universe.

Sylvia Jablonski, CEO of Defiance ETFs.

Sylvia Jablonski, CEO of Defiance ETFs.

The Defiance R2000 Enhanced Options Income ETF (IWMY US) has been listed on NYSE Arca with an expense ratio of 0.99%.

IWMY delivers a put-write options strategy on the Russell 2000 Index, a prominent US small-cap equities benchmark. A put-write strategy involves selling put options on an underlying asset or index to collect premiums as income.

Notably distinct from other put-write ETFs, IWMY uses daily options in the implementation of its strategy, an approach designed to realize rapid time decay by selling in the money puts.

According to Defiance, by using daily options, the fund aims to provide a more frequent income stream, offering a compelling case for those in search of reliable yields in a low-interest-rate environment.

Contrary to the standard quarterly or annual payout schemes often seen in the market, IWMY opts for a monthly payout system, providing both stability and predictability for investors who rely on a consistent income stream.

Defiance’s daily put-write suite includes two additional ETFs designed to generate income based on the Nasdaq 100 and S&P 500 indices. The $150 million Defiance Nasdaq 100 Enhanced Option Income ETF (QQQY US) and $50m Defiance S&P 500 Enhanced Option Income ETF (JEPY US) also have expense ratios of 0.99% each.

Defiance notes, however, that the daily put-write strategy may be most effective when applied to the US small-cap universe due to the segment’s higher volatility, thereby amplifying the potential for investors to generate income.

Sylvia Jablonski, CEO of Defiance ETFs, said: “IWMY has the potential to reshape the Russell 2000 options income strategies within the ETF landscape, offering investors a new paradigm for income generation.”

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