The Fidelity Yield Enhanced Equity ETF pays 8.4% and returned 8.9% since inception versus SPY's 14.1%. Lower volatility and options risk define the trade-off.
The Fidelity Yield Enhanced Equity ETF (FYEE) offers an 8.4% dividend yield, higher than popular covered-call ETFs like QYLD and JEPI. Its total return since inception in 2022 trails the S&P 500 by a wide margin, the analyst wrote.
Since its launch, FYEE returned 8.9% total. The SPDR S&P 500 ETF (SPY) returned 14.1% over the same period. The ETF's expense ratio is 0.48%. Assets under management stand at roughly $50 million, the analyst noted.
FYEE uses an options strategy that sells calls and puts to generate premium income. That strategy produces high current income. It also caps upside and introduces options risk. The analyst said the fund's lower volatility – a maximum drawdown of 8.5% versus SPY's 12.9% – may appeal to income-focused investors willing to sacrifice total return.
The ETF's small size and low trading volume mean it may not suit large institutional allocations. The options strategy also carries the risk of assignment or gap moves. For investors prioritizing current income over capital appreciation, FYEE's 8.4% yield comes with a clear trade-off: lower total return and options risk. The fund's track record remains short, the analyst noted.
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