Clients Stuck Holding Cash? These ETFs Offer a Bridge

It’s a complicated investing landscape out there right now, with volatility aplenty. That can put off clients who see headlines about geopolitics and balk — which can mean missing out on opportunities. ETFs offer a variety of strategies that can help ease client nerves, offering a bit of extra income while also providing greater upside than cash alone.

ETFs like GPIX and GPIQ, both from Goldman Sachs Asset Management, offer useful examples. Those funds take advantage of the growing popularity of call options in the ETF wrapper to combine income and equity performance. 

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(GPIX A), the Goldman Sachs S&P 500 Premium Income ETF and (GPIQ A), the Goldman Sachs Nasdaq-100 Premium Income ETF, each prove such an approach to income. Both charge a competitive 29 basis points for an active approach. 

The pair of funds invest in those underlying equities in their respective indexes, looking to mirror their style, capitalization, and other characteristics as much as possible. The ETFs each sell call options on between 25% and 75% of the portfolio’s equity investments. Meanwhile, they also use FLEX options — another income tool — as needed. Dividends, too, help add to that income pool.

Together, GPIX and GPIQ have returned 14.7% and 19.7%, respectively, over the last one-year period, according to ETF Database data. GPIQ has provided a 10.1% 12-month trailing distribution rate per Goldman Sachs data, while GPIX has offered an 8.11% 12-month trialing distribution.

Those funds represent strong options to get clients off the sidelines. Cash can play a big role for portfolios, no doubt. However, advisors know that better options are out there. Income ETFs like these can bridge the gap between nervous clients and bigger returns. 

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