"The Roundhill S&P 500 Target 20 Managed Distribution ETF is an actively managed ETF that pays monthly distributions at a target annualized rate of 20% while maintaining exposure to the S&P 500 Index. It does so by investing at least 80% of its net assets in FLEX Options (Flexible Exchange Options) that reference the SPDR S&P 500 ETF (NYSEARCA:SPY ) . These specialized options contracts allow the fund to replicate S&P 500 exposure while generating the cash flow needed for its high monthly distribution payments."
"The S&P 500 exposure is a secondary objective, while the main objective is maintaining a yield above 20%. The 20% targeted rate is obviously not guaranteed and may be increased or decreased as the market sags and swells. XPAY currently yields 20.54%. It carries an expense ratio of 0.49%, or $49 per $10,000. The ETF is down 2.34%, but the fat dividends have caused it to outperform JEPI and QYLD significantly."
Monthly dividend stocks using options can amplify yields but typically cap upside while leaving downside risk largely exposed. Investors willing to accept that downside may prefer funds that target higher yields while following similar option-based strategies. Roundhill S&P 500 Target 20 Managed Distribution ETF (XPAY) targets a 20% annualized distribution by investing at least 80% of net assets in FLEX Options referencing SPY, making S&P 500 exposure secondary to yield generation. The 20% target is not guaranteed. XPAY yields about 20.54%, charges a 0.49% expense ratio, and has outperformed some peers due to large dividends despite modest capital declines.
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