QYLG vs. QQQX: Readers Say Better NASDAQ 100 Comparison (NASDAQ: QQQX)


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(This article was co-produced with Hoya Capital Real Estate)


After recently posting QQQX Vs. QYLD: 2 Covered Call Funds On The NASDAQ 100, several readers said that the Nasdaq 100 Covered Call & Growth ETFs (NASDAQ:QYLG) was a better fund to compare with the Nuveen Nasdaq 100 Dynamic Replacement Fund (NASDAQ:QQQX) as both targets write calls against about half of their portfolio, while the Global X NASDAQ 100 Covered Call ETF (QYLD) covers 100%.

Sometimes an “apples-oranges” comparison is more valuable, especially if the two “apples” are literally the same. Despite QYLG’s limited history, enough interest was shown in the comments to the previous article, that such an article was warranted. What makes QYLG and QQQX “apples” is their similarities between the Nasdaq 100 stocks and the 50% targeted CC write. The “orange” is how option writing is applied: passive versus active. So far, this has favored QYLG.

Explore the Nasdaq 100 Covered Call & Growth ETFs

Seeking Alpha describes this ETF as follows:

The Global X Nasdaq 100 Covered Call & Growth ETF invests directly and through derivatives in stocks of companies operating in diversified sectors. He uses derivatives such as options to build his portfolio. It invests in growth and value stocks of large capitalization companies. It aims to monitor the performance of Index Cboe Nasdaq 100 Half BuyWrite V2. QYLG was formed on September 18, 2020.

Source: seekalpha.com QYLG

QYLG has $57 million in assets with a current yield of 6.3%. Managers charge 60 basis points in fees. They list three reasons in the fund fact sheet why investors would own their ETF:

  • High income potential: QYLG seeks to generate income by selling covered call options on the underlying index.
  • Upside potential: By writing calls on 50% of the portfolio, the strategy allows investors to capture half of the upside potential of the underlying index.
  • Monthly Distributions: QYLG expects to make distributions on a monthly basis.

QYLG Holdings Review

QYLG Fact Sheet

globalxetfs.com QYLG Fact Sheet

As expected, sector allocations reflect the main fund of the NASDAQ 100, the Invesco QQQ ETFs (QQQ). Also, as desired if not expected, QYLG has lower risk stats (Beta, StdDev) than the unhedged choice, but this calmer strategy resulted in a lower Sharpe ratio, meaning the QQQ investor has received better returns for the risk taken.

The asset allocation is:

  • Ordinary shares: 102 holdings with a weighting of 101.22%
  • Call options: 2 positions with a weight of -1.35%
  • Cash: 1 position with a weight of 0.13%

Main holdings


globalxetfs.com; compiled by author

Some of the weighting differences that readers will see between QYLG and QQQX are the date of the data, because QQQX is from the end of February; QYLG data is up to date. Currently, QYLG holds options on two indices:

  • Short 8 contracts on the NQX index (20/05/22 with a strike of 2810)
  • Short 20 contracts on the NDX index (20/05/22 with a strike of 37305)

The NQX index is the Nasdaq-100 Reduced Value Index and equals 1/5 of the total value of the Nasdaq-100 index, which is the NDX. The use of the “mini” version allows more precise coverage of the ordinary shares held.

QYLG Option Strategy

The Global X Nasdaq 100 Covered Call & Growth ETF (QYLG) follows a “buy-covered” or “buy-sell” strategy, in which the Fund buys Nasdaq 100 Index stocks and “sells” or ” sell” the corresponding call options. on approximately 50% of the value of the portfolio of shares of the same index.

Source: globalxetfs.com QYLG

Since they compare to the , their options strategy follows that of the Index Cboe Nasdaq 100 Half BuyWrite V2 which describes this strategy as follows:

The Cboe NASDAQ-100 Half BuyWrite V2 Index (BXNH) measures the total rate of return of a NASDAQ-100 hedged buy strategy. This strategy (“BXNH Covered Call Strategy”) consists of holding a portfolio indexed to the NASDAQ-100 and selling a succession of one-month call options on the NASDAQ-100 (NDX) listed on the PHLX exchange. .

Source: indexes.nasdaqomx.com BXNH

It differs from the Global X NASDAQ 100 Covered Call ETF (QYLD), which covers 100% of their portfolio. Later, I’ll show how this affects their results against the two funds covered in this article.

QYLG Distribution Review


searchalpha.com DVD QYLG

Higher interest rates and volatility are two variables that contribute to higher option premiums, which could help increase future monthly distributions. As with most options strategy funds, a large portion of the distributions does not come from net investment income (NII), but from capital gains and/or ROC. The following table shows the composition of the previous financial year:

sources of distribution for the options fund

globalxetfs.com QYLG 19-a PDF

Nuveen Nasdaq 100 Dynamic Overwrite Fund Quick Review

This will be a summary of what I wrote in my recent article when I compared QQQX to QYLD. A link to this article is at the beginning of this one.

Seeking Alpha describes this CEF as follows:

Nuveen Nasdaq 100 Dynamic Overwrite Fund is a closed-end fund designed to provide regular distributions through a strategy that seeks attractive total return with less volatility than the Nasdaq 100 Index by investing in a portfolio of stocks that seeks to largely replicate the price movements of the Nasdaq. 100, as well as writing call options on 35% to 75% of the notional value of the Fund’s equity portfolio. QQQX uses the NASDAQ 100 TR USD index as a benchmark and was launched in 2007.

Source: seekalpha.com QQQX

QQQX has amassed $1.11 billion in assets and is currently yielding 7.46%, with managers charging 90 bps in fees; reasonable for a CEF write option. Unlike many CEFs, QQQX does not use any leverage. Currently, QQQX is at a premium of 0.95%; while for most of the first quarter it sold at a discount.

QQQX Holdings Review

Since QQQX invests based on the NASDAQ 100 index, it is understandably a very tech-focused ETF, with 51% of the shares spread across six tech-focused sectors. Top holdings reflect this concentration.


nuveen.com QQQX

At the end of March, QQQX held 151 assets, including 131 US stocks, 3 foreign stocks, 2 ETFs and 9 options, all of which expire on April 22.

QQQX Options Strategy

Nuveen provides these strategy details.

QQQX Option Strategy

nuveen.com QQQX

The definitions of each stat can be read using this link. At the end of February, QQQX was close to the target weight of 55%, as the coverage was 51%. What I didn’t find was a policy related to time or ITM/OTM targets when writing options. The above data refers to the date of holding, not execution values.

Four funds with three different approaches for Nasdaq 100 investors

Nasdaq 100 Fund


Looking at the previous chart, notice that QQQX, with its momentum options strategy, saw a steep decline earlier this year that QYLG’s index strategy evaded. This discrepancy manifests in the Sharpe and Sortino ratio differences, which greatly favor QYLG. With QYLG using a “passive options strategy” and QQQX using, their term, a “dynamic options strategy”, which offers a clear difference in helping investors choose between these two funds. With QQQX, you “bet” on the managers and models used by this fund to be better than using the 1 month ATM options strategy used by QYLG. What each investor prefers would seem to depend on the level of risk they want to take. A true conservative investor could accept the risk/reward trade-off and opt for QYLD.

Final Thoughts

As an investor in one of these funds, do you take or reinvest the dividends? Using dividendchannel.com/drip-returns-calculator makes a difference in the final CAGR. Using this source, includes partial months that my PV subscription does not include.

Teleprinter Starting price End price reinvested Taken
QYLG $26.24 $28.28 17.74% 18.20%
QQQX $23.64 $26.46 14.41% 14.38%
QQQ $264.16 $338.43 17.85% 17.86%

The website did not specify the dividends received, but that cannot be much over the past 18 months. QYLG investors were better off taking the dividends while there was not much difference for the other two funds.

Since the chart above cut April, I’ll include this one.

Data by YCharts

April’s poor performance for QQQX widened the “since inception” CAGR with QYLG from 161 bps at the start of the month to 333 bps in mid-April. Point ? : dates matter.


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