Why Investors Are Piling into Funds That Promise Not to Beat the Stock Market

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Funds that use options have attracted a lot of investors lately. Before you choose to buy one, make sure you understand the trade-offs you'll be making, says jasonzweigwsj

Finally, you can earn income of 4% or more on cash and bonds. What if you could earn monthly dividends on stocks at an annual rate of at least 11%?

That’s the pitch for exchange-traded funds that are generating eye-popping yields by selling options contracts. These ETFs, known as covered-call or option-income funds, also shielded investors from some of the pounding that stocks took last year.

 

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