Three iShares ETFs leverage covered calls on Treasury and corporate bonds to deliver double-digit annual yields amid high rate volatility.
Three BlackRock iShares ETFs—TLTW, LQDW, and HYGW—are distributing over 10% annual yields monthly by selling covered calls on underlying bond funds. The strategy capitalizes on elevated Treasury yields near 5% and heightened rate volatility, boosting option premiums that fund the payouts.
TLTW targets long-dated Treasuries, LQDW focuses on investment-grade corporates, and HYGW holds high-yield bonds, offering varying risk profiles. HYGW led the trio with a 6% 12-month total return but faces greater downside if recession-driven defaults rise.
The funds combine traditional bond exposure with covered call overlays, converting option premiums into monthly cash distributions. Their performance hinges on sustained volatility and stable credit conditions.