Apple Soared 15% in July, but GPIQ Holders Lost 6%: The Hidden Options Tax on Covered-Call ETFs

If you bought Goldman Sachs Nasdaq-100 Core Premium Income ETF (NYSEARCA:GPIQ) astatine motorboat expecting to seizure the Nasdaq-100's upside portion collecting precocious monthly income, you whitethorn person been disappointed successful July. Apple (NASDAQ:AAPL), the fund's largest azygous exposure, ripped 15.23% higher successful the period connected a blockbuster net beat. GPIQ fell 6.1% during the aforesaid period. That show spread reflects the fund's strategy moving precisely arsenic designed.

What You're Actually Paying

GPIQ has an disbursal ratio of 0.29% a year, oregon astir $29 annually per $10,000 invested. Set against Invesco QQQ Trust (NASDAQ:QQQ), the mainstream Nasdaq-100 reflector commonly quoted astir 0.20% ($20 per $10,000), the interest spread looks trivial. Over 20 years, that dispersed compounds to conscionable a fewer 100 dollars.

The higher outgo sits elsewhere. Since GPIQ launched connected October 26, 2023, the fund's full instrumentality with distributions reinvested is 89.08%. QQQ climbed 89.21% connected terms unsocial from October 2, 2023, earlier you adhd QQQ's ain dividend stream. Apple, the apical holding, returned 94.31% implicit that stretch. Even with the summation of the premium income stream, GPIQ underperformed erstwhile compared to QQQ and its apical holding.

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The Part the Factsheet Doesn't Highlight

GPIQ layers a dynamic telephone overlay connected a Nasdaq-100 basket. The manager sells telephone options against the portfolio to harvest premium, which becomes the "core premium income" successful the name. Every dollar of premium collected comes with a ceiling attached. When names similar Apple rally past the onslaught terms of the written call, the money owes the enactment purchaser the difference, and that summation leaves the shareholder's pocket.