An ETF With 12% Returns? New Offering Wants To Compete Using Options

Amplify ETFs announced the launch of the Amplify Bloomberg U.S. Treasury Target High Income ETF TLTP on Tuesday, aiming for an ambitious 12% annual income target through a covered call strategy on U.S. Treasury assets.

This new ETF is built to appeal to income-hungry investors who want more consistent returns without the rollercoaster volatility of the broader equities market.

Adding Punch To Tradition Treasury Returns

This unique fund, a collaboration between Amplify ETFs, Samsung Asset Management, and Bloomberg, is designed to add punch to traditional Treasury returns by layering in a high-income, options-based twist.

Using a weekly covered call strategy on long-dated U.S. Treasuries, TLTP aims to generate income above what Treasuries alone typically offer, all while maintaining the defensive, stability-focused core of government-backed bonds. Christian Magoon, CEO of Amplify ETFs, highlights the appeal, saying TLTP “offers a multi-use solution for consistent high-income potential and a defensive position.”

Read Also: QQQI: The Undiscovered Nasdaq-100 Covered Call ETF You’ve Been Looking For (14.4% Distribution Yield)

TLTP’s Compelling Edge Over QYLD?

In a crowded space, TLTP enters as a new contender up against the widely-known Global X NASDAQ 100 Covered Call ETF QYLD.

While QYLD already boasts $8.16 billion in assets and a respectable 11.77% yield, it's largely dependent on the tech-heavy NASDAQ 100, giving it a more growth-centric, high-volatility profile. TLTP, on the other hand, positions itself as a less turbulent alternative, relying on U.S. Treasuries and aiming to generate its 12% income through options premiums.

TLTP’s goal is a steady monthly payout, which could make it attractive for investors looking for a reliable income stream that also incorporates portfolio stability. For those hesitant about betting on tech volatility or equity market cycles, TLTP's bond-based, income-focused approach could offer a compelling alternative.

Yield Boost For The Risk Averse?

This ETF's 12% target certainly gives it some bragging rights, particularly in the relatively tame waters of fixed income. If TLTP's approach succeeds in delivering consistent, high income, it could quickly become a favorite for risk-averse investors seeking a yield boost.

Only time will tell if TLTP can reach the heights of QYLD's success—though with the backing of Samsung Asset Management's experienced team, it certainly has a solid start.

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• JPMorgan Vs. Global X: Which High-Yield Dividend ETF Is The Better Pick As Fed Cuts Interest Rates?

Image created using artificial intelligence via Midjourney.