BlackRock is launching an exchange-traded fund that invests in U.S. stocks that pay dividends while also using an options-based strategy that aims to provide an additional source of income.
The BlackRock Advantage Large Cap Income ETF may appeal to, say, a recent retiree who is looking for income as well as potential growth to keep pace with inflation, according to Jacobs. Investors in the actively managed ETF stand to receive two income streams from a single fund, with “the option premium” given to shareholders regardless of market movement, he said.
BlackRock, the world’s largest asset manager, has created other exchange-traded funds that use investing strategies involving options contracts. At the end of June, the firm launched its first “buffer” ETFs, funds designed to give investors some downside protection in the U.S. stock market as well as potential gains with a cap.