Blue-chip stocks are popular investment choices for their proven track record, dividend payments and comparatively low volatility.
However it can be difficult to project upside as this blue-chip status can come with upside priced in.
Rather choosing one or two, this ASX ETF gives you exposure to the top 20 ASX companies in one trade.
It also is engineered to maximise passive income through a unique covered call strategy.
BetaShares Australian Top 20 Equity Yield Maximiser Fund (ASX: YMAX)
This ETF is designed to get more income from Australia's top blue-chip ASX shares.
It includes holdings like:
- Commonwealth Bank of Australia (ASX: CBA)
- BHP Group Ltd (ASX: BHP)
- CSL Ltd (ASX: CSL)
- National Australia Bank Ltd (ASX: NAB)
- ANZ Group Holdings Ltd (ASX: ANZ)
- Wesfarmers Ltd (ASX: WES)
- Westpac Banking Corp (ASX: WBC).
However, YMAX does not track an index.
Instead, it aims to generate attractive quarterly income and reduce the volatility of portfolio returns.
It does this by implementing an equity strategy over a portfolio of the 20 largest blue-chip shares listed on the ASX.
What does this really mean?
Instead of just trying to match the market (like many ETFs do), YMAX ETF focuses on generating regular income — paid every three months — and aims to reduce ups and downs in your investment.
It uses a strategy called "covered call writing."
This means it earns extra money by selling options (contracts) on the shares it already owns.
This strategy can boost income, especially when the stock market isn't going up or down much.
So while the fund has been flat over the last year (down 2%), holders of this ETF have enjoyed a distribution yield of 8.0%.
So, in simple terms YMAX holds strong, well-known Aussie companies.
Plus, it uses a strategy to try to give you higher income with lower risk.
Why choose this ETF?
Many investors will have exposure to these top 20 blue-chip companies on the ASX through individual holdings or other ETFs that track indexes like the ASX200.
This ETF is unique and may suit investors who are looking for higher yields, without taking significant risk.
It is not focussed on beating or tracking a specific market, but rather in maximising passive income.
It's important to consider diversification in terms of exposure to individual holdings, but also in your investment strategy, as this fund could provide passive income regardless of market performance.
