REX Shares Launches New Covered Call ETF Targeting AI Market Leaders for Enhanced Income Opportunities
REX Shares has launched the REX AI Equity Premium Income ETF (Nasdaq: AIPI), targeting leading AI companies and using a covered call strategy for enhanced monthly income. AIPI tracks the BITA Leaders Select Index, including top U.S. AI hardware, software, infrastructure, and services companies. The ETF aims to generate income by selling out-of-the-money call options while allowing for potential appreciation in the AI sector. This is REX's second covered call ETF, following the FANG & Equity Premium Innovation Index ETF (Nasdaq: FEPI), which has over $225 million in assets. The AIPI is designed for growth and income investors, providing a steady income stream and potential downside protection during market dips.
- Launch of AIPI, a new ETF targeting AI market leaders.
- AIPI uses a covered call strategy to provide enhanced monthly income.
- The ETF tracks the BITA Leaders Select Index, including top U.S. AI companies.
- Potential for appreciation in the AI sector alongside income generation.
- Successful track record with the FANG & Equity Premium Innovation Index ETF (FEPI), which has over $225 million in assets.
- AIPI aims to offer downside protection during market dips.
- Covered call strategy may limit upside potential if AI stocks significantly rise.
- Income generation depends on the premiums from selling call options, which may vary.
- No mention of the expense ratio for AIPI, which could impact net returns.
- The ETF's success is tied to the performance of the AI sector, which can be volatile.
Insights
The launch of the REX AI Equity Premium Income ETF (AIPI) is noteworthy due to its focus on leading AI companies and the use of a covered call strategy to enhance income. Covered call ETFs are a strategy where the fund sells call options on its holdings, generating premium income in exchange for capping upside potential. For investors, this means possible consistent income, which could be appealing in a volatile market.
From a financial perspective, this product targets both growth and income investors. By tracking the BITA Leaders Select Index, it provides exposure to top AI technology companies—a rapidly growing sector. The success of REX's previous ETF (FEPI) with over
Short-term, the ETF could attract interest due to its income potential and the buzz around AI technology. Long-term, its performance will depend heavily on the sustained growth of AI companies and the effectiveness of the covered call strategy in various market conditions. Investors should consider these factors and compare with other income-generating options.
For technology enthusiasts, AIPI's focus on leading AI companies is significant. AI technology is at the forefront of innovation, impacting industries from healthcare to finance. The BITA Leaders Select Index comprises top players in AI hardware, software and services, ensuring diversification within the sector. This could appeal to investors looking for robust exposure to disruptive technologies.
AI technology has potential for high growth, driven by advancements in machine learning, big data and cloud computing. Investors in this ETF could benefit from these trends, although they should be mindful of the inherent volatility associated with tech stocks. The covered call strategy can mitigate some risks by generating income, but it might also limit gains during periods of rapid stock price appreciation.
Overall, the launch of AIPI aligns with the increasing demand for AI-focused investment products. Investors should stay informed about developments in the AI sector, as technological breakthroughs and regulatory changes can significantly impact performance.
The introduction of AIPI taps into the growing trend of thematic investing, where investors seek to capitalize on specific trends or sectors. AI is a prime example, given its transformative potential across various industries. AIPI's use of a covered call strategy adds an income dimension, which differentiates it from other AI-focused ETFs that primarily aim for capital appreciation.
From a market research standpoint, this product could attract a broad investor base, including those who are interested in AI technology but also seek regular income. It also serves as a hedge against market downturns due to the premium income generated from the covered call strategy. However, investors need to be aware of the trade-off between income and potential capital gains, particularly in a high-growth sector like AI.
This ETF's success will likely depend on investor sentiment towards AI and the overall market conditions. Given the current interest in AI and technology, AIPI has the potential to draw significant attention and capital. Still, investors should evaluate how this product fits within their broader investment strategy and risk tolerance.
AIPI Tracks The BITA Leaders Select Index, Expanding REX’s Innovative ETF Lineup
AIPI grants investors access to top
AIPI marks REX's second venture into covered call ETFs, building on the momentum of the FANG & Equity Premium Innovation Index ETF (Nasdaq: FEPI), which has accumulated over
“The AI revolution is transforming every industry and presents vast investment potential. Building on our success with our covered call FANG & Innovation ETF (ticker: FEPI), we launched AIPI to allow investors to capitalize on these advancements owning the stocks while using options to provide a steady income stream,” said Scott Acheychek, COO of REX Shares. “We are excited to be working with BITA on this product for the underlying index. This strategy leverages the growth potential of key AI stocks and delivers monthly income from companies that typically do not pay dividends, potentially serving as a downside hedge during market dips. AIPI exemplifies REX Shares' commitment to innovating the covered call ETF landscape with specialized, options-based strategies that seek to address investor needs of potential NAV growth & income.”
For more information on REX Shares or AIPI, please visit www.rexshares.com.
About REX Shares
REX is an innovative ETF provider specializing in alternative-strategy ETFs and ETNs. The firm created MicroSectors™ and co-created the T-REX product lines of leveraged and inverse tools for traders and recently launched a series of option-based income strategies. The firm is rooted in decades of experience in building solutions for investor and trader portfolios.
An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. The Fund’s prospectus and summary prospectus contain this and other information about REX Shares. To obtain a Fund’s prospectus and summary prospectus call 844-802-4004. A Fund’s prospectus and summary prospectus should be read carefully before investing.
Important Risks
Sector Concentration Risk. The trading prices of the Fund’s underlying securities may be highly volatile and could continue to be subject to wide fluctuations in response to various factors. The stock market in general, and the market for technology companies in particular, where applicable, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.
Derivatives Risk. Derivatives are financial instruments that derive value from the underlying reference asset or assets, such as stocks, bonds, or funds (including ETFs), interest rates or indexes. The Fund’s investments in derivatives may pose risks in addition to, and greater than, those associated with directly investing in securities or other ordinary investments, including risk related to the market, imperfect correlation with underlying investments or the Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation, and legal restrictions.
Distribution Risk. As part of the Fund’s investment objective, the Fund seeks to provide current monthly income. There is no assurance that the Fund will make a distribution in any given month. If the Fund does make distributions, the amounts of such distributions will likely vary greatly from one distribution to the next.
Call Writing Strategy Risk. The path dependency (i.e., the continued use) of the Fund’s call writing strategy will impact the extent to which the Fund participates in the positive price returns of the individual stocks comprising the Index and, in turn, the Fund’s returns, both during the term of the sold call options and over longer time periods.
Technology Industry Risk. The stock prices of technology and technology-related companies and, therefore, the value of the Fund, may experience significant price movements as a result of intense market volatility, worldwide competition, consumer preferences, product compatibility, product obsolescence, government regulation, excessive investor optimism or pessimism, or other factors.
Liquidity Risk. Some securities held by the Fund, including options contracts, may be difficult to sell or be illiquid, particularly during times of market turmoil. This risk is greater for the Fund as it will hold options contracts on a single security, and not a broader range of options contracts.
New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decisions.
Index: BITA AI Leaders Select Index is a rules-based composite index that tracks the market performance of companies, listed on recognized exchanges based in the US, that are at the forefront of AI technologies.
Out of the Money Option: An out of the money call option has a strike price that is higher than the price of the underlying asset.
Call Option: Call options are financial contracts that give the buyer the right—but not the obligation—to buy a stock, bond, commodity, or other asset or instrument at a specified price within a specific period.
The REX Shares ETFs are distributed by Foreside Fund Services, LLC, not affiliated with Rex Shares, LLC, or its affiliates.
*The fund intends to make distributions, if any, on a monthly basis.
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Gregory FCA for REX Shares
rexshares@gregoryfca.com
Source: REX Shares
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