The CBOE Volatility Index, otherwise known as Wall Street’s fear gauge, is coming off its most volatile week since April. For investors hesitant to ride out the recent wild swings, Invesco senior portfolio manager John Burrello sees income funds that employ options-based strategies as a sound game plan.
His reasoning: These funds have more structural protection embedded in them. “Options are not reliant on the correlations of stocks with another asset class,” Burrello told CNBC’s *ETF Edge* this week. “They can have a more reliable form of downside protection, and also can offer income that’s not interest rate sensitive.”
Burrello, who serves on Invesco’s global asset allocation team, suggests that this should serve as an advantage to investors amid the expected rate-cutting cycle. Policymakers are anticipated to cut rates by a quarter point later this month, according to the consensus on Wall Street.
“Adding income without reliance on the Fed is becoming more and more important. I think that’s driving some growth in the space,” he noted.
Invesco’s income-generated funds include the Invesco QQQ Income Advantage ETF, Invesco S&P 500 Equal Weight Income Advantage ETF, and the Invesco MSCI EAFE Income Advantage ETF.
So far this year, the Invesco MSCI EAFE Income Advantage ETF has gained about 14%, while the QQQ Income Advantage ETF is up approximately 6%. Both funds are also up about 2% over the past week. Meanwhile, the Invesco S&P 500 Equal Weight Income Advantage ETF is virtually flat for the year.
According to Burrello, there is a “very large tailwind” for options and defined outcome strategies that could last for many years. “The demand themes of income and defense against equity drawdowns should never go out of style,” he said. “Those are things that every portfolio likely needs at some point throughout someone’s life. Investors might want to reduce risk to equities or add income that serves as a diversifying source, and, again, is not reliant on interest rates.”
Burrello also points out that the options income space has attracted many new product launches, which could make it challenging for investors to understand the differences between offerings. His advice: look for option income ETFs managed by institutional-grade options professionals, and beware of unsustainable yields paired with potentially high fees.
https://www.cnbc.com/2025/10/18/market-volatility-relief-invesco-looks-at-income-portfolio-strategies.html
