On this Australian Investors Podcast, Owen Rask speaks with Global X’s Marc Jocum about using ETFs for passive income.
Marc steps us through:
- How ETFs generate passive income
- The common types of passive income ETFs
- Dividend income ETFs
- Covered call ETFs
- 3 Global X ETFs designed for income: AYLD, ZYAU & USTB
- How to analyse passive income ETFs, especially covered call strategies
- How tax works on ETFs, including tax statements, turnover and franking credits
Marc Jocum, Global X podcast – list of questions
Ice breakers with Marc
What have been your 2 best investments (by performance, or value) and what have you learned?
Are ETFs a good way to invest for children?
Body of conversation
Marc’s background, how he got started and why he wanted to move into ETFs with GX.
A lot of people still don’t understand how to use ETFs for passive income, what are the major similarities and differences to, say, direct stocks and managed funds?
Can you briefly talk to the tax implications of using ETFs for passive income? A couple of the common issues I hear is around why folks have to wait to do their tax return, and whether they’re suitable for high income tax payers, who prefer not to crystallise gains?
How do you think about turnover in a portfolio and how it impacts investors seeking income?
Now I’d like to talk about the various sources of income in a portfolio, and how your ETFs match to them…
AYLD is an example of a covered call ETF offered by GX. It tracks the ASX 200 but with a covered call overlay. Can walk us through this? What is a covered call strategy?
When would you expect a covered call strategy like this to perform better and worse, in Total Return (TR) terms, versus a vanilla index fund tracking the ASX 200?
Why are covered call strategies so popular in the US versus Australia?
ZYAU is another example. But this ETF does something quite different. It’s simpler and more elegant in its design. Let’s step through the ZYAU ETF. From universe to filter and final portfolio.
How about on the fixed income side, bonds or credit, what does GX offer here? The USTB ETF has exploded in popularity amongst, I’m guessing, advisers, over the past two years. Why is that?
Outro
Final question, Marc, if you could go back and tell your younger self one thing about finance, money or investing what would it be?
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this episode, you’ll LOVE our series. Episodes go live every Saturday at 7 am and Wednesday arvo.
