As Interest Rates Fall, These Equity Income ETFs Can Step Up

Core Viewpoint - Interest rates have already decreased by 25 basis points and may continue to fall, prompting investors to consider alternative income sources such as equity income ETFs to enhance fixed income performance [1][4] Group 1: Interest Rate Environment - The Federal Reserve's efforts to tame inflation could lead to further interest rate cuts, impacting fixed income allocations in investor portfolios [1] - A potential economic downturn could result in lower yields for traditional bonds, making equity income ETFs more attractive for investors, especially those nearing retirement [1] Group 2: Active Equity Income ETFs - The Goldman Sachs Nasdaq-100 Premium Income ETF (GPIQ) and the Goldman Sachs S&P 500 Premium Income ETF (GPIX) both charge a fee of 29 basis points and provide yield options outside the fixed income category [2] - GPIX focuses on the S&P 500 while GPIQ targets the Nasdaq 100, with both funds employing call options on 25% to 75% of their holdings to generate equity income [2] Group 3: Performance Metrics - Year-to-date returns for GPIX and GPIQ are 12.1% and 15.1%, respectively, outperforming their FactSet Segment Averages [3] - As of July 31, GPIX offered an 8.17% trailing 12-month dividend yield, while GPIQ provided a 9.9% yield as of August 31 [3] Group 4: Strategic Implications - GPIQ and GPIX present meaningful options for advisors seeking to provide additional income to clients as interest rates decline [4]