These Funds Are Yield Magicians. How Do They Do It?
New funds offer huge payouts, but harbor even bigger risks
By Jason Zweig, The Wall Street Journal, June 27, 2025
The dividend yield on the S&P 500 is 1.3%. As if by magic, nearly a dozen exchange-traded funds were offering payouts of at least 100% this week…
Option-income funds generate high weekly or monthly income by trading options contracts on a single stock…
Many of these ETFs are tied to such volatile stocks as Coinbase, MicroStrategy, Nvidia or Tesla. Often, much of the “yield” is just your own money handed back to you, and the principal value of your investment could shrivel…
Piling risk in this many layers for individual investors is reminiscent of funds that rolled out right before the crash of 1929… [end quote]
This is only one of many current examples of investors with too much risk appetite.
Wendy
