NEW YORK, April 22, 2019 /PRNewswire/ -- Global X ETFs, the New York based provider of exchange traded funds, today announced that it has launched the Global X Russell 2000 Covered Call ETF (Cboe:RYLD), designed to track the Cboe Russell 2000 BuyWrite Index. The fund gains exposure to the stocks in the Russell 2000 Index and writes at-the-money monthly call options on the same index. The fund receives a premium from writing the call options, which can help increase the fund's distributions and potentially mitigate downside risks.
The Russell 2000 Index primarily includes smaller market capitalization U.S. companies (small caps), those with a market value between $300 million and $2 billion. The small cap index is historically linked to increased volatility and returns relative to mid- and large-cap indices. As volatility rises, so too does the size of the premium that can be generated by writing a call option. RYLD presents a single solution for investors looking to incorporate a small cap covered call strategy, who may otherwise need to accept significant time and expense to operate this strategy individually.
"Small caps can have higher volatility, which typically leads to greater option premiums," said Rohan Reddy, Research Analyst at Global X. "We are thrilled to be able to offer investors the opportunity to utilize a covered call strategy on the premier small cap benchmark index, the Russell 2000. We believe RYLD is a great complement to our other covered call offerings, as investors continue to look for alternative sources of income."
RYLD is the third ETF in Global X's Covered Call suite of ETFs, joining the Global X Nasdaq 100 Covered Call ETF (QYLD) and the Global X S&P 500 Covered Call ETF (HSPX). The suite now totals over $500 million in AUM as of April 16, 2019.
ABOUT GLOBAL X
Global X was founded in 2008 with the mission of listening to and empowering clients to invest wisely in unexplored and intelligent solutions. Our product lineup features more than 60 ETF strategies. While we are distinguished for our Thematic Growth, Income and International Access ETFs, we also offer Core, Commodity, Alpha and Risk Management funds to suit a wide range of investment objectives. Global X is a member of Mirae Asset Global Investments Group, a Seoul-based global enterprise which offers asset management expertise worldwide. Explore our ETFs, research and insights, and more at globalxfunds.com.
Investing involves risk, including the possible loss of principal. Investments in smaller companies typically exhibit higher volatility. Concentration in a particular industry or sector will subject RYLD to loss due to adverse occurrences that may affect that industry or sector. Investors in RYLD should be willing to accept a high degree of volatility in the price of the fund's shares and the possibility of significant losses.
RYLD engages in options trading. An option is a contract sold by one party to another that gives the buyer the right, but not the obligation, to buy (call) or sell (put) a stock at an agreed upon price within a certain period or on a specific date. A covered call option involves holding a long position in a particular asset, in this case U.S. common equities, and writing a call option on that same asset with the goal of realizing additional income from the option premium. RYLD writes covered call index options on the Russell 2000 Index. By selling covered call options, the fund limits its opportunity to profit from an increase in the price of the underlying index above the exercise price, but continues to bear the risk of a decline in the index. A liquid market may not exist for options held by the fund. While the fund receives premiums for writing the call options, the price it realizes from the exercise of an option could be substantially below the indices current market price. Investment in the Fund is subject to the risks of the underlying fund.
Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.
Carefully consider the Funds' investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Funds' full or summary prospectus, which may be obtained by calling 1-888-GX-FUND-1 (1.888.493.8631), or by visiting globalxfunds.com. Read the prospectus carefully before investing.
Global X Management Company LLC serves as an advisor to Global X Funds. The Funds are distributed by SEI Investments Distribution Co. (SIDCO), which is not affiliated with Global X Management Company LLC. Global X Funds are not sponsored, endorsed, issued, sold or promoted by FTSE Russell or CBOE, nor do these entities make any representations regarding the advisability of investing in the Global X Funds. Neither SIDCO nor Global X are affiliated with these entities.
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