Global X Nasdaq 100 Covered Call ETF (QYLD) Review

Moving on from my usual reviews of dividend ETFs, let’s take a closer look at one of their more juiced-up cousins: covered call ETFs. These also deliver regular income, but instead of collecting dividends paid out by companies, they generate cash flow from selling options—specifically via a buy-write strategy.

No need to beat a dead horse here—the usual caveats apply. This strategy caps your upside, offers limited downside protection, and isn’t particularly tax efficient. That said, there’s a lot of variation in how these funds are built, and one of the most popular options out there is the Global X Nasdaq 100 Covered Call ETF (QYLD).

With over $8 billion in assets, QYLD clearly resonates with income-seeking investors. But high AUM only tells you what’s popular—not what’s effective. And in QYLD’s case, the way it’s designed leaves a lot to be desired when it comes to total return and long-term performance. Here’s my honest take on whether this covered call ETF is really worth your time and money.

QYLD: What I Like

This section will be mercifully short—but fair’s fair. There are some things that make QYLD attractive, especially to yield-chasers who may not fully grasp how total return works.

First, the yield. With a distribution rate of 12.7%, QYLD puts traditional income sources to shame. It pays more than most dividend stocks, real estate investment trusts (REITs), master limited partnerships (MLPs), and even gives high-yield plays like mortgage REITs and business development companies (BDCs) a run for their money.

The yield is so high because of what QYLD holds—and what it does with those holdings. The fund owns the Nasdaq-100 Index, which is packed with large-cap growth and tech stocks known for their volatility. And as you probably know, higher volatility tends to mean higher option premiums, all else being equal.

QYLD takes a basket of stocks tracking the Nasdaq-100 and systematically sells monthly at-the-money (ATM) call options on 100% of its holdings. These are European-style index options, meaning they can’t be exercised early, eliminating the risk of early assignment.

Selling ATM monthly calls also means the ETF is collecting maximum premium available each month, since that’s where time value is highest. A systematic approach like this creates consistency—there’s no guesswork, just a rules-based strategy executed month after month.

Source: Global X ETFs

QYLD distributes either half the premiums it collects or 1% of the fund’s net asset value—whichever is lower, with any excess reinvested. That distribution paid monthly, and according to Global X, they’ve delivered this income stream consistently for more than 11 years.

So, if you’re looking for predictable, high monthly income and aren’t too concerned about long-term growth, you can see the appeal of an ETF like QYLD.

QYLD: What I Dislike

At the risk of offending the cult over at r/qyldgang, this ETF has a lot of drawbacks that make it a subpar product in my books. Sue me.

Let’s start with the cost. QYLD charges a 0.60% expense ratio, which is high for what is essentially an index-tracking, rules-based covered call strategy. Compare that to a fund like JPMorgan Nasdaq Equity Premium Income ETF (JEPQ), which offers active management and a more flexible approach using equity-linked notes (ELNs), all for a lower fee of 0.35%.

Then there’s the strategy itself. Selling ATM calls on 100% of the portfolio every single month is far from optimal. It locks in income at the expense of growth. You collect a premium, sure—but you give up nearly all your upside on the Nasdaq-100. I much prefer a more tactical approach like what Amplify CWP Enhanced Dividend Income ETF (DIVO) does: selectively selling out-of-the-money calls on individual stocks while retaining more upside potential.

The result of QYLD’s structure is that it participates strongly in market drawdowns but struggles to recover during rallies. It’s particularly vulnerable to whipsaw moves like the 2020 COVID crash, where the index fell sharply and then rebounded quickly, leaving QYLD lagging.

The long-term numbers speak for themselves. From December 12, 2013, to April 11, 2025, QYLD delivered a paltry total return of just 7.25%—and that’s assuming perfect reinvestment of distributions in a tax-free account like a Roth IRA.

If you were actually withdrawing the income to spend, and letting the shares ride, you lost money. The fund’s net asset value declined by -3.72% annually during that same period. That erosion is largely due to the strategy’s inability to participate in up days—the very days that drive long-term equity returns.

To add insult to injury, you could have beaten QYLD’s total return over the same period with a basic 50/50 portfolio of Invesco QQQ ETF (QQQ) and SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), rebalanced quarterly. If you wanted income, you could have just sold shares as needed and still come out ahead—all without sacrificing upside.

And let’s not gloss over the distribution composition. According to the most recent Form 19a filing, QYLD’s March distribution of $0.1703 was largely return of capital. Yes, that’s tax-deferred—but it’s also just your own money coming back to you. Even Global X admits this in their own words:

TL;DR: You’re paying 0.6% to cap your upside, retain full downside, underperform a basic 50/50 mix of QQQ and T-bills, and receive your own money back each month in the form of return of capital.

QYLD: My Verdict

QYLD gets a 4/10—and that’s being generous. The only reason it doesn’t score lower is because some of the newer 0DTE and synthetic covered call ETFs have claimed the crown in the “why does this exist?” category. QYLD isn’t a ticking time bomb, but I fully expect it to keep underperforming long-term.

If all you care about is yield—without any regard for what happens to your principal—and you’re willing to ignore the reality that total return is what actually builds wealth, then sure, QYLD might have a place in your portfolio. If you must own QYLD, at least hold it in a tax-sheltered account like a Roth IRA.

If you're determined to chase monthly income and refuse to understand the math behind what's happening, then you’ll probably find QYLD’s distributions comforting. Just remember, you're trading long-term growth for short-term gratification, and that hardly ever ends well.