XYLD holds the stocks in the S&P 500 and sells at-the-money call options on the index each month. The option premium produces a high monthly distribution, but the strategy gives up gains above the strike price while keeping most of the downside, so total returns have lagged the S&P 500 in rising markets. Part of the distribution can be classified as return of capital. XYLD is the S&P 500 counterpart of QYLD, with lower volatility because the S&P 500 is less concentrated in technology.
