MLPD Profile
The Global X MLP & Energy Infrastructure Covered Call ETF seeks to provide investors with income and total return by investing primarily in securities of energy infrastructure companies and utilizing a covered call strategy. Under normal market conditions, the fund invests at least 80% of its net assets, including any borrowings for investment purposes, in the component securities of its underlying index. This index is designed to reflect the performance of a theoretical portfolio that combines investments in energy infrastructure with a covered call strategy, as defined by Cboe Global Indices, LLC.
The fund's investment strategy involves holding a diversified portfolio of master limited partnerships (MLPs) and energy infrastructure companies. MLPs are typically involved in the extraction, processing, and transportation of energy resources, and are known for their potential to provide high yields. By focusing on this sector, the fund aims to capture the income and growth potential associated with energy infrastructure while also seeking to enhance returns through the use of covered call options.
The covered call strategy employed by the fund involves writing call options on the securities held within the portfolio. This approach aims to generate additional income from the option premiums while retaining the potential for capital appreciation from the underlying securities. The covered call strategy can help to mitigate downside risk and enhance yield, although it may also limit the upside potential of the portfolio if the underlying securities rise significantly in value.
The fund is managed with an emphasis on both income generation and risk management. It provides investors with exposure to the energy infrastructure sector while implementing a strategy designed to increase current income through options premiums. As a non-diversified fund, it concentrates its investments in specific sectors and strategies, which can lead to higher volatility compared to more broadly diversified funds. This ETF is suitable for investors seeking to combine income from energy infrastructure investments with the potential benefits of a covered call strategy.
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