Single stock and covered call come together in ETF line

investmentnews.com:

A forthcoming ETF suite is aiming at the crossroads of two investing trends currently having their moments: single-stock products and covered-call strategies.

That appears to be the heart of the Rex IncomeMax ETFs — a line of 17 funds, each of which gives the covered-call treatment to a specific security. The stocks are big names, ranging from Amazon to Disney, but some of the products focus on third-party funds, such as the VanEck Semiconductor ETF.

The firm, Rex Shares, made an initial filing for the products with the Securities and Exchange Commission earlier this year but on Thursday filed an update that included more complete information, such as fees, and indicated the ETFs could launch within 75 days, if approved.

Single-stock ETFs began appearing on the market a year ago, accompanied by a warning from SEC Commissioner Caroline Crenshaw for the masses: Although they focus on individual securities, they are complex products, providing leveraged or inverse exposure, that casual investors should avoid dabbling with.

Although covered-call ETFs have been around for years, they came into vogue last year as stock and bond prices were tanking. While the products are generally designed to help limit downside, they also have lower positive returns than one would get with direct exposure to a security.

“Advisors and investors have increasingly become comfortable with covered-call ETFs. They provide some downside protection, enhanced income even if the equity does not pay a dividend, and ease of use,” Todd Rosenbluth, head of research at VettaFi, said in an email. “The most popular funds, like JEPI, QYLD and DIVO, own options and a broad range of stocks. However, we have seen growing supply of single security focused,