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High yields don’t require covered calls, but they do require taking on different risks. Instead of equity upside being capped, the trade-off shifts toward credit risk and structural complexity within fixed income and hybrid strategies.
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BIZD generates income through diversified exposure to private credit via BDCs. It offers high yields backed by middle-market lending, but comes with credit sensitivity, drawdowns during stress periods, and layered fees from underlying externally managed BDC structures.
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XCCC pushes yields into double digits by targeting the riskiest segment of the bond market. By focusing on CCC-rated issuers, it benefits when defaults remain contained, but carries significant default risk, higher volatility, and lower tax efficiency in taxable accounts.
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Most Americans drastically underestimate how much they need to retire and overestimate how prepared they are. But data shows that people with one habit have more than double the savings of those who don’t.
Covered calls can be hit or miss. Personally, I tend to prefer actively managed strategies that write calls on individual holdings. That approach can leave more upside on the table, take advantage of spikes in implied volatility around events like earnings, and be more selective with both the underlying securities and strike prices.
What I’m less fond of are the more systematic buy-write strategies. These simply go long an index and sell at-the-money calls on 100% of the portfolio. The result is often a lopsided risk-reward profile where most of your upside is capped, while the income you receive is taxable and doesn’t do much to offset downside risk.
That said, covered call ETFs aren’t the only way to generate high income. There are other, less talked-about strategies that can push yields into the 10% range. But there’s no free lunch here. You’re still taking on risk. It may not be traditional equity risk, but it can show up as credit risk depending on the strategy.
This is where fixed income and hybrid approaches come into play. A lot of investors wrote off bonds after the 2022 bear market, when rising rates and high inflation hit the asset class hard. But the reality is that fixed income is a broad universe with a wide range of risk-return profiles.
If you’re an advanced ETF investor, or at least willing to understand what you’re buying, there are options out there that can deliver double-digit yields without relying on covered calls. Here are two ETFs that currently offer yields of 10% or more, without using options.
Private credit has been in the spotlight recently. A number of large private credit funds have started restricting redemptions as investors grow concerned about a potential downturn in the space. And that stress isn’t limited to private funds. Even the publicly traded segment, BDCs, has been feeling it.
For those unfamiliar, BDCs are pass-through investment vehicles designed to give retail investors access to private credit investments. They trade on exchanges like stocks and typically hold portfolios of loans made to middle-market companies. In exchange for distributing most of their income to shareholders, they can avoid corporate-level taxation, which is why yields tend to be high.
There’s a lot of variety in this space, though, and analyzing individual BDCs can be challenging. Investors often look at metrics like net investment income, non-accrual rates, and leverage ratios. Or you can take a more diversified and hands-off approach through an ETF. One option is the VanEck BDC Income ETF (NYSEMKT: BIZD).
This ETF holds 35 BDCs, weighted by market capitalization. In practice, that means the larger, more liquid, and generally more established BDCs tend to carry more weight in the portfolio. As expected, income is the main draw here. BIZD currently offers a 12.71% distribution yield.
Now, one thing that tends to catch investors off guard is the headline expense ratio. BIZD shows a total expense ratio of 12.86%, which looks extremely high at first glance. But most of that doesn’t actually go to VanEck.
These are largely acquired fund fees and expenses. Many BDCs are externally managed, and those managers charge fees at the underlying company level, often including incentive fees. Those costs are passed through and reflected in the ETF’s reported expense ratio.
If you strip that out, BIZD’s actual management fee is around 0.40%, with about 0.02% in additional expenses. The remaining 12.44% comes from the underlying BDC structures, and there’s no real way to avoid that if you want exposure to this asset class.
That said, this is not a low-risk investment. BDCs are sensitive to credit conditions, and that’s showing up in recent performance. As of February 28, year to date, BIZD is down 10.27% on a net asset value basis. Over a longer horizon, though, the picture looks different. Over the past 10 years, the fund has delivered an annualized total return of 8.65%.
Here’s one rule in fixed income that rarely changes: the more credit risk you take on, the higher your yield tends to be. Think of it like lending money to a deadbeat friend. If you’re not confident you’ll get paid back, you’re going to charge a much higher interest rate. Now replace that friend with a company in financial distress, and that’s essentially how the high-yield bond market works.
Credit ratings formalize this risk. Once a bond falls below BBB, it enters high-yield territory, also known as junk bonds. These companies carry a much higher probability of default. According to S&P Global, the three-year cumulative default rate for BBB-rated bonds is just 0.91%. Drop down to BB, and it rises to 4.17%. At single-B, it jumps to 12.41%. And at CCC, it spikes to 45.67%.
That last category is exactly what the BondBloxx CCC Rated USD High Yield Corporate Bond ETF (NYSEMKT: XCCC) targets. XCCC holds a diversified portfolio of bonds rated between CCC1 and CCC3 based on an average across major rating agencies. To help manage concentration risk, the ETF caps exposure to any single issuer at 2%.
The portfolio is also fairly diversified across industries. Media companies make up the largest share at about 14.7%, followed by industrials at 10%, healthcare at 9.7%, insurance at 9%, telecommunications at 8.7%, and consumer goods at 8.2%.
Now, despite those high default risks, when credit conditions are stable and defaults remain contained, investors can get paid quite well. Right now, XCCC offers an 11.23% 30-day SEC yield after accounting for its 0.40% expense ratio. And unlike BIZD, which pays quarterly, XCCC distributes income monthly.
Recent performance reflects that favorable environment. As of December 31, 2025, XCCC delivered a 13.17% annualized total return with distributions reinvested. But there’s an important trade-off here: taxes. High-yield bond income is not tax efficient.
Unlike Treasury securities, which are exempt from state income taxes, high-yield corporate bond income is taxed at both federal and state levels. If you’re in a higher tax bracket and holding this in a taxable account, your after-tax yield can be meaningfully lower.
Most Americans drastically underestimate how much they need to retire and overestimate how prepared they are. But data shows that people with one habit have more than double the savings of those who don’t.
And no, it’s got nothing to do with increasing your income, savings, clipping coupons, or even cutting back on your lifestyle. It’s much more straightforward (and powerful) than any of that. Frankly, it’s shocking more people don’t adopt the habit given how easy it is.