FEPI Profile
The REX FANG & Innovation Equity Premium Income ETF employs a strategic covered call approach to achieve a balance between income generation and participation in the growth of the technology sector. The fund predominantly invests in the stocks included in its benchmark, the Solactive FANG Innovation Index, which represents a curated selection of major U.S. technology companies. By writing slightly out-of-the-money call options on these stocks, the ETF aims to capitalize on the volatility of high-growth tech firms, which is reflected in the premiums received from the options.
The covered call strategy utilized by the ETF involves holding the underlying technology stocks and selling call options that are slightly out of the money. This approach allows the fund to generate additional income from the option premiums, providing a potential cushion against declines in stock prices. However, it is important to note that this buffer is limited to the premiums received and may not fully protect against significant losses in the underlying securities. This strategy is designed to enhance yield while still maintaining exposure to potential upside in the technology sector.
The Solactive FANG Innovation Index, which serves as the fund's benchmark, is an equal-weighted index composed of 15 prominent U.S. technology companies. This index includes eight core holdings: Apple, Alphabet, Amazon, Meta, Microsoft, Netflix, Nvidia, and Tesla. The remaining seven companies are selected based on quarterly trading volumes from various technology-related industries as tracked by Factset. This diversified selection ensures broad representation within the technology sector, focusing on both high-profile and emerging tech companies.
The REX FANG & Innovation Equity Premium Income ETF offers investors a way to benefit from the growth potential of leading technology stocks while generating additional income through its covered call strategy. By leveraging the volatility and high premiums associated with big-tech companies, the fund aims to enhance returns and provide a measure of income stability. This strategy makes the ETF suitable for investors seeking both exposure to cutting-edge technology and a steady income stream.
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