All weather retirement portfolio having only two ETF ????

[troubled soul]

I try to find simple all weather no "non sense" portfolio for retirement.
During search I find one amazing ETF called "Global X NASDAQ 100 Covered Call ETF". Basically It base on covered call option strategy. It gives you very good monthly dividend around 10%.

So If I invest all money on two ETF

1)SPDR S&P 500 ETF Trust (SPY) == This ETF increase my capital forever and give some dividend quarterly
2)Global X NASDAQ 100 Covered Call ETF == This ETF provide monthly income for daily expenses.

by doing this I achieve monthly around 6% dividend income overall and my capital will rise forever with SPY ETF .
Is it good strategy ?
or Am I missing something ?

Thanks

 

[celizo]

Normally QYLD is not available for europeans (ie with IB).
You expose yourself to 100% of the downside of the tracked index and you cap the gain with the covered calls.
You should check closed-end fund "covered call" instead (available on IB for europeans).
https://www.cefa.com/FundSelector/Classifications.fs#ClassDetailResultssee cefconnect too

 

[Silvio]

Selling covered calls or naked puts is not a magical way to generate income without risk.
As @celizo wrote, this method caps your gains when markets rise but risk is practically unlimited when market crashes.
Generally it's called "Picking coins in front of a steamroller"
Note that QYLD still didn't recover to the highs before Covid (or even the high of 2014).

If you're desperate for income you can buy SPYD which is like SPY but with top dividend stocks. Still, you're probably better off just buying the total index and sell some when you need income.

You can use this tool to backtest portfolio of various ETFs and compare drawdown, avg gains, etc:
https://www.portfoliovisualizer.com/examples
Generally I can tell you that just using these 2 ETFs is not really an allweather portfolio, they are incredibly correlated and when the market tanks they will both crash.

Last edited: Jul 7, 2021

 

[JustAnotherNomad]

Look into the Boglehead philosophy. The general advice is to buy an all-world ETF like VWRA + bonds like IGLA.
Or you could simply buy "Vanguard Lifestrategy 80", which is more or less the same thing, but they do the rebalancing for you.
I have to admit though that I haven't had time to dive deeper into this myself.

 

[Martin Everson]

azb1 said:
2)Global X NASDAQ 100 Covered Call ETF == This ETF provide monthly income for daily expenses.
Click to expand...

That Global X Covered Call ETF is as risky as these monthly yielding notes from UBS smi(&%. I would look elsewhere for monthly income funds.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[troubled soul]

Martin Everson said:
That Global X Covered Call ETF is as risky as these monthly yielding notes from UBS smi(&%. I would look elsewhere for monthly income funds.
Click to expand...

What will your suggestion for monthly income funds in today's market ?

 

[jjrapy]

how much money do you have? how much time do you plan to live with the dividends?

 

[Martin Everson]

azb1 said:
What will your suggestion for monthly income funds in today's market ?
Click to expand...

Would always go bonds, bonds, bonds fund. But as non-high yield bond funds are yielding nothing for new entrants I see an equity monthly income fund like the Blackrock Systematic Global Equity High Income as next best.

P.S Don't take this as financial advice......errr just read my signature 😀.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[avalanche]

Martin Everson said:
Would always go bonds, bonds, bonds fund. But as non-high yield bond funds are yielding nothing for new entrants I see an equity monthly income fund like the Blackrock Systematic Global Equity High Income as next best.

P.S Don't take this as financial advice......errr just read my signature 😀.
Click to expand...

Cant find their ticker on InteractiveBrokers... Can you please type it here?

Also, what do you think about VWRL?

 

[Mr Gus]

Why not buy S&P with 100% of your money and write covered calls on that, or only write them when you need the money.

 

[Martin Everson]

avalanche said:
Cant find their ticker on InteractiveBrokers... Can you please type it here?
Click to expand...

You may need to ask them to add it in.

avalanche said:
Also, what do you think about VWRL?
Click to expand...

Thats Vanguard version of Ishares All World Index I think. If so then it should be core in a portfolio. I prefer these than S&P 500 index as you get some of the exposure to the S&P 500 plus exposure to global growth which is important.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[celizo]

VWRL-VWRA is nearly equivalent to MCSI World (ie Ishares IWDA...) 90% + 10% emerging (ie EMIM/IS3N...)

I have VWRA(*) and these Ishares Etfs... and others like Xtrackers, Amundi... it's part of my diversification strategy aswell: multiple ETF emettors, brokers, juridisctions, assets, currencies.

(*) I prefer accumulating ETFs (when possible) for a lazy investing + tax efficient (no capital gain tax).

Last edited: Jul 7, 2021

 

[zzzzzz]

azb1 said:
I try to find simple all weather no "non sense" portfolio for retirement.
During search I find one amazing ETF called "Global X NASDAQ 100 Covered Call ETF". Basically It base on covered call option strategy. It gives you very good monthly dividend around 10%.

So If I invest all money on two ETF

1)SPDR S&P 500 ETF Trust (SPY) == This ETF increase my capital forever and give some dividend quarterly
2)Global X NASDAQ 100 Covered Call ETF == This ETF provide monthly income for daily expenses.

by doing this I achieve monthly around 6% dividend income overall and my capital will rise forever with SPY ETF .
Is it good strategy ?
or Am I missing something ?
Click to expand...

QYLD last 36 months (price & dividend return): +30.7%, max. drawdown (Feb-March 2020): -24.7%
QQQ last 36 months (price & dividend return): +115.7%, max. drawdown (Feb-March 2020): -28.6%

Don't bother with QYLD, not worth it.

 

[JustAnotherNomad]

celizo said:
(*) I prefer accumulating ETFs (when possible) for a lazy investing + tax efficient (no capital gain tax).
Click to expand...

Some countries also tax accumulated dividends, so it doesn't make any difference for how much you pay in taxes.

 

[jjrapy]

celizo said:
VWRL-VWRA is nearly equivalent to MCSI World (ie Ishares IWDA...) 90% + 10% emerging (ie EMIM/IS3N...)

I have VWRA(*) and these Ishares Etfs... and others like Xtrackers, Amundi... it's part of my diversification strategy aswell: multiple ETF emettors, brokers, juridisctions, assets, currencies.

(*) I prefer accumulating ETFs (when possible) for a lazy investing + tax efficient (no capital gain tax).
Click to expand...

Do you own the same underlying assets in two or three etfs of different managers?

 

[MiddleEuroAsia]

I don't get why people think it's a great idea to invest into QYLD or any covered calls ETF, I've never been a fan of these. Is it a good cash flow? sure, but the risk/reward ratio is terrible.

The ATM covered call strategy will never beat the underlying market it is indexing, and due to the high dividend rate, it will follow a market down very quickly but will not increase capital as quickly.

In order for it to look like a good bet, the historic bull run must continue. and If you were planning on retiring with a large amount of your portfolio in QYLD and the market went down for several years, you would lose all of your retirement income, and the value of QYLD would follow the market down. In general, QYLD is no bad bet by any means, it's a good play because we're in the longest bull run in history, but I simply want you to be aware of the risks.

and if you still want to do that, then diversify into QQQ, RYLD, NUSI and JEPI too. but don't just go all in into QYLD, that's a terrible idea (Also I can't help it since it's a known fact that I'm a sucker for diversification 🙂 )

Last edited: Jul 8, 2021

 

[celizo]

JustAnotherNomad said:
Some countries also tax accumulated dividends, so it doesn't make any difference for how much you pay in taxes.
Click to expand...

Sure, it was in regards of my situation in my country. There is also a cost of orders with distributing if a re-investment is done and so more work.

jjrapy said:
Do you own the same underlying assets in two or three etfs of different managers?
Click to expand...

Not sure to understand your question. Whatever the ETF emettor it's the same underlying if the followed benchmark (ie "MSCI World index") is the same.

I know a very good book about ETF but it´s in french (author E. Petit).

Last edited: Jul 8, 2021

 

[BlueMist]

JustAnotherNomad said:
Look into the Boglehead philosophy. The general advice is to buy an all-world ETF like VWRA + bonds like IGLA.
Or you could simply buy "Vanguard Lifestrategy 80", which is more or less the same thing, but they do the rebalancing for you.
I have to admit though that I haven't had time to dive deeper into this myself.
Click to expand...

Yes, it's very good and available on more and more exchanges it seems. Initially on XETRA and Italian exchange, recently also on Euronext. I intend to replace my portfolio of ETFs with a single V80A.

https://www.bankeronwheels.com/vanguard-lifestrategy-ucits-etfs-europe/

 

[jjrapy]

celizo said:
Sure, it was in regards of my situation in my country. There is also a cost of orders with distributing if a re-investment is done and so more work.

Not sure to understand your question. Whatever the ETF emettor it's the same underlying if the followed benchmark (ie "MSCI World index") is the same.

I know a very good book about ETF but it´s in french (author E. Petit).
Click to expand...

Ah ok, my question was if you own etf of different emettor that track the same benchmark? If that the case I suppose you only diversify between emettors but not the assets itself.