3 Covered Call ETFs to Buy for Monthly Income in 2026

The ProShares S&P 500 High Income ETF (NYSEARCA:ISPY) charges 0.56% a year to run a daily covered call program on the S&P 500. That is meaningfully more expensive than JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI) at 0.35% and roughly on par with Global X S&P 500 Covered Call ETF (NYSEARCA:XYLD) at 0.60%. The question is whether ISPY’s structural design earns those extra basis points.

The theme here is high-income equity funds that convert index exposure into a monthly paycheck through options. Each of the three funds does that differently, and the differences are showing up in 2026 returns, distribution stability, and portfolio complexity.

Why Covered Call Income Is Having a Moment

Yields on high-income equity ETFs are well above those of Treasuries or dividend indexes, and retirees have noticed. Assets have flowed toward funds that promise mid-to-high single-digit distributions without abandoning the S&P 500 entirely. The trade-off is capped upside in strong bull markets. How each fund manages that cap, daily versus monthly, at-the-money versus out-of-the-money, active stock selection versus index replication, is what separates a good fee from a wasted one.

ISPY: Paying Up for a Daily Reset

The ProShares S&P 500 High Income ETF tracks the S&P 500 Daily Covered Call Index, holding long S&P 500 exposure while writing one-day-to-expiration call options on the index. That daily reset is the whole argument. Traditional covered call funds sell monthly at-the-money calls and get locked into a ceiling for 30 days. ISPY writes fresh out-of-the-money calls every session, so a strong rally on Tuesday does not cap Wednesday’s upside at Monday’s strike price.

The mechanism shows up in the numbers. ISPY returned nearly 10% year to date and about 19% over the past year on price alone, and delivered roughly a 19% total return, including dividends. Since its inception in December 2023, the fund has averaged about 17% annually, which puts the 0.56% fee in perspective as a small slice of a healthy return stream.

The portfolio is more complex than the marketing suggests. Top holdings account for 135.16% of assets because the fund uses leverage through swap agreements with Goldman Sachs, BNP Paribas, Bank of America, and Citibank. Those swaps make up roughly 97.10% of the top ten positions. Direct equity ownership skews toward mega-cap tech, with NVIDIA, Apple, and Microsoft. An S&P 500 E-Mini futures contract adds further directional exposure. That derivative stack is part of what the 0.56% fee covers, and it is meaningfully more elaborate than a plain index sleeve.

Income comes monthly and moves around. The trailing twelve-month distribution totals $2.23 per share, with a forward annualized run rate near $3.02. The last twelve months of payouts have ranged from a low of roughly $0.05 to a spike above $1.27 in May 2025, which is honest to the strategy: option premiums flex with volatility. Seeking Alpha’s Cain Lee, upgrading the fund to Buy in July 2025, praised its “superior capital stability, less price decay, high tax-efficient income through call writing”. Fred Piard argued the opposite case in May 2026, calling ISPY “uncompelling” given its underperformance relative to SPY and its irregular monthly checks.

The tradeoff is straightforward. ISPY charges more than JEPI to run a swap-heavy, leveraged structure that captures more upside than a monthly covered call fund and preserves capital better than higher-yielding peers. In a flat or choppy market, it earns its keep. In a runaway bull market, it will still trail the raw index.

JEPI: The Cheaper, Actively Managed Alternative

The JPMorgan Equity Premium Income ETF is the fund most ISPY buyers considered first. Its 0.35% expense ratio is roughly a third cheaper, and its actively selected low-volatility stock sleeve pairs with equity-linked notes that mimic covered call payoffs. The result is a smoother ride and less concentrated bet on any single position. Top holdings such as Broadcom, Ross Stores, and Amazon each account for about 1.7%, so no single name drives the fund.

Income here has been steadier than at ISPY. JEPI paid $4.57 per share over the trailing twelve months with a forward run rate near $4.65, and monthly checks in 2026 have clustered in a tight $0.34 to $0.45 range. That predictability matters if the distribution is funding real expenses.

The catch shows up in total return. JEPI is up just 3% year-to-date and about 8% over the past year, meaningfully behind ISPY. The defensive equity sleeve that produces the smoother income also drags in strong markets. Investors who want the lowest fee and the steadiest paycheck get one. Investors who want the S&P 500’s upside participation give something up.

XYLD: The Pure Baseline, Same Price

The Global X S&P 500 Covered Call ETF (XYLD) is the incumbent, newer covered call fund benchmark. At 0.60%, it is fractionally more expensive than ISPY and follows the older playbook. The fund holds the full S&P 500, sells one-month at-the-money calls on the entire notional, and distributes the premium. No leverage, no swaps, and no active stock picking.

Performance reflects the design. XYLD returned about 7% year-to-date and 17% over one year, sitting between JEPI’s conservatism and ISPY’s daily-reset design. It belongs on the list precisely because it is the plain-vanilla version of what ISPY charges roughly the same fee to modernize. If you cannot articulate why the daily reset is worth paying for, XYLD makes ISPY’s fee harder to defend. The 0.56% expense ratio on ISPY buys a swap-and-leverage engine that resets its option ceiling every day.

Which Fund Matches Which Investor

ISPY’s mega-cap equity core is worth paying up for if the goal is meaningful S&P 500 participation, an 8.3% starting yield, and you can stomach lumpy monthly checks. It is a poor fit if predictable income is the whole point.

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