The fund holds a stock portfolio that tracks the Russell 2000 Index and uses a "Buy-Write" strategy, selling at-the-money call options every month. In exchange for giving up gains when the index rises, it collects option sale proceeds (premiums) and pays them out to investors as distributions.

Given the high volatility of the US small-cap market, it suits cash-flow-focused investors who want to maximize monthly dividend income.

It is a passively managed (index-tracking) ETF launched by Global X in 2019.

While holding the index constituents directly or investing in related ETFs, the fund secures premium income by selling Russell 2000 Index call options each month. The structure can deliver favorable performance relative to the index when the market moves sideways or declines modestly.

• A high-dividend strategy that takes advantage of the high volatility of the US small-cap market
• Stable, high monthly cash flow

Assets under management (AUM) stand at $1.3B, and the total expense ratio is 0.60% per year.

Because it runs a regular index-based option-selling strategy, its fees are higher than those of a typical index fund, but the size of the distributions it generates offsets this.

Thanks to the large swings in the small-cap market, the fund has secured high option premiums and maintained a double-digit dividend yield, but it has captured almost none of the upside during sharp rallies.

Capital seeking to maximize income flows in when interest rates are expected to peak or when a sideways market looks likely, and the fund is especially popular among individual investors who prefer high dividends.

The fund has a clear advantage in its high monthly dividend income, but keep in mind that it cannot fully protect against declines in the underlying assets and that its upside is capped.

JEPI and JEPQ, shown in the table, are leading income ETFs that adjust options actively, while QYLD is a sibling product based on the Nasdaq 100. If you want more stable dividends, you could consider the large-cap-based GPIX or GPIQ, and if you want to invest only in small-cap growth without a covered call, IWM is an alternative. If you are aiming for both income and price appreciation, DIVO is also worth reviewing.

We have summarized the key points to check before deciding to invest in the RYLD ETF. It is important to approach it with a solid understanding of the covered call strategy's profit-and-loss structure and the characteristics of the small-cap market.

If the decline in the underlying asset's price exceeds the option premium income, the total return can turn negative. In addition, because distributions make up a large share of returns from a tax perspective, you should consider whether to use a tax-advantaged account.

This product suits investors whose main goal is the cash flow generated each month rather than steady price appreciation. It works well within a portfolio when combined with other assets to manage volatility and raise the income allocation.