Horizons Nasdaq 100 Covered Call ETF reaches $100m AUM milestone

Jul 26th, 2017 | By | Category: Equities

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Horizons ETFs Management US (Horizons US) has announced that its flagship fund, the Horizons Nasdaq 100 Covered Call ETF (Nasdaq: QYLD), has surpassed $100 million in assets under management (AUM).

Garrett Paolella, managing director at Horizons US

Garrett Paolella, managing director at Horizons US.

QYLD launched in December 2013 and tracks the CBOE Nasdaq‐100 BuyWrite V2 Index which replicates a covered call strategy on the Nasdaq 100 Index. The Nasdaq 100 Index is a US large-cap equity index which represents the performance of the 100 largest non-financial stocks listed on Nasdaq Exchange.

A covered call is an options strategy whereby an investor holds a long position in an asset and sells or “writes” call options on that same asset in an attempt to generate more income (the additional income from option premiums) than the asset would otherwise provide on its own from dividends or other distributions.

Option-based strategies take advantage of the supply-demand imbalance that exists between investors looking to hedge their equity positions and the lower number of hedge providers. This allows the fund to harvest the volatility risk premium and generate income for investors while managing the downside risk.

In terms of the fund’s strategy, QYLD writes calls with a one month expiration date which are slightly out of the money. It has a total expense ratio (TER) of 0.60%.

AUM in the fund at the start of 2017 was $58.8m, and has since grown by over 110% (including an 11.8% year-to-date return of the fund’s underlying assets) to reach $125.0m as of 19 July 2017.

Garrett Paolella, managing director at Horizons US, commented: “QYLD gives investors across the spectrum access to professional options management. We have simultaneously offered upside exposure with a monthly income stream, which is exactly what investors have been looking for given the recent environment of depressed yields coupled with economic uncertainties, and the current political climate. This milestone is a testament to the team’s success, and we’re looking forward to continuing the momentum, both within QYLD and across the rest of our product suite.”

Horizons US also offers the Horizons S&P 500 Covered Call ETF (HSPX) which overlays a call writing strategy on top of owning the constituents of the US bellwether S&P 500 Index. It has a TER of 0.65%.

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