2 ETFs That Pay 10% (or More) Without Covered Call Options

Core Insights - The article discusses two ETFs that offer yields of 10% or more without relying on covered call options, highlighting the associated risks and complexities of these investment strategies [2][11]. Group 1: ETF Overview - The VanEck BDC Income ETF (BIZD) provides exposure to Business Development Companies (BDCs), focusing on middle-market lending, and currently offers a distribution yield of 12.71% [15][18]. - The BondBloxx CCC Rated USD High Yield Corporate Bond ETF (XCCC) targets CCC-rated bonds, providing an 11.23% 30-day SEC yield, and distributes income monthly [24][22]. Group 2: Risk and Performance - BIZD is sensitive to credit conditions, with a year-to-date decline of 10.27% as of February 28, but has delivered an annualized total return of 8.65% over the past decade [18][15]. - XCCC has shown a favorable performance with a 13.17% annualized total return as of December 31, 2025, but carries significant default risk due to its focus on lower-rated bonds [25][21]. Group 3: Structural Considerations - BIZD's high expense ratio of 12.86% is primarily due to fees from externally managed BDCs, with the actual management fee being around 0.40% [15][17]. - XCCC's income is not tax-efficient, as high-yield corporate bond income is taxed at both federal and state levels, potentially reducing after-tax yields for investors in higher tax brackets [26][25].