BALI and DIVO use options overlays on large-cap portfolios to generate up to 9% yields during September's historically weak stretch for stocks. The S&P 500 averages negative September returns since 1928, and this year's VIX spike to 31 directly boosted premiums for call-writing income funds. JAAA holds AAA CLO tranches with an equity beta of 0.03, paying roughly 5% in floating-rate yield with near-zero sensitivity to stock market moves.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and BALI didn't make the cut. Grab the names FREE today. September has an unusually poor reputation on Wall Street, with the S&P 500 posting an average negative return for the month going back to 1928.
With the VIX near 16 and the index up roughly 13% year to date, income investors are looking at three actively managed funds that keep the cash coming while equities work through the calendar's weakest stretch: iShares U.S. Large Cap Premium Income Active ETF (CBOE:BALI), Amplify CWP Enhanced Dividend Income ETF (NYSEARCA:DIVO), and Janus Henderson AAA CLO ETF (NYSEARCA:JAAA). Each fund pulls income from a different lever.
BALI writes options on large-cap equity exposure. DIVO layers tactical call writing on top of a dividend growth portfolio. JAAA sits entirely outside equities in floating-rate AAA collateralized loan obligation tranches.
Distributions on the equity funds have run into the high-single-digit range, while the CLO fund offers a lower rate with a very different risk profile. The seasonal pattern is well documented, though it is not deterministic. Last September actually finished green, with the S&P 500 gaining about 4% last September.
What has been reliable across decades is elevated dispersion and drawdown risk in the month, which is what income overlays are built to monetize. Higher realized and implied volatility raises the premium call writers collect, and floating-rate coupons reset off short-term reference rates, which currently sit around 3.9% at the three-month point of the Treasury curve. The VIX has already flashed warning signs this year, spiking to 31 in late March and again to above 20 in late July.
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