INVESTING IDEAS
Unlock enhanced income potential with Fidelity Yield Enhanced Equity ETF (FYEE)
The rapid rise of derivative income
Over the past five years, the derivative income category has grown from $7B in 2020 to $152B in AUM across exchange-traded funds and mutual funds by 2025.¹
The growing popularity of the derivative income category is driven by two key factors: investor demand for new sources of yield and increased accessibility through mutual funds and ETFs.
Explore how derivative income compares to other traditional income sources.
Derivative income funds have provided attractive income
Past performance is no guarantee of future results. It is not possible to invest directly in an index. All indexes are unmanaged. Source: Bloomberg Finance L.P., JP Morgan, Morningstar, as of 6/30/2025. 12-Month Yield: An expression of the amount paid out in distributions (pre-tax) by the investment in the last 12 months expressed as a percentage of the previous month end price. Distributions include capital gains, dividend and interest payments but does not include any return of capital payments. U.S. Aggregate Bond—Bloomberg U.S. Aggregate Bond Index; High-Yield Bonds—ICE BofA High Yield Bond Index.
Source: Fidelity Investments, as of 09/01/2025. For illustrative purposes only.
Active derivative management paired with a thoughtful structure
The ETF builds off of the Fidelity Enhanced Large Cap Core strategy, layering on income-focused, short call option overlay.
FYEE call options are systematically rebalanced weekly, ensuring that all investors receive similar portfolio attributes, regardless of their entry point.
FYEE also has the ability to dynamically trade between options rolls. This dynamic portfolio management allows FYEE to monetize gains or adjust risk exposure with changing market conditions.
Fidelity Yield Enhanced Equity ETF (FYEE)
- Active systematic equity
- Enhanced income potential
- Competitive pricing2
Explore more options-based investing ideas
Fidelity Hedged Equity Fund (FEQJX)
FEQJX seeks to provide capital appreciation by offering equity exposure while aiming to boost performance during periods of market volatility–such as drawdowns, sell offs, and bear markets–by employing an options-based strategy designed to provide downside protection.
Learn more
Fidelity Hedged Equity ETF (FHEQ)
FHEQ aims to protect against sudden and meaningful market drawdowns, while still participating in sharp market rallies, by buying put options at various expires and strikes. Because this strategy strictly buys protection, it may lag in low volatility or sideways trading markets.
Learn more
Fidelity Dynamic Buffered Equity ETF (FBUF)
FBUF combines call-writing and put-buying overlays to create a dynamic “collar” overlay. The resulting strategy is defensive; it aims to provide good downside protection but may give up some upside participation.
Learn more
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1. Source: Bloomberg, as of 07/31/2025; Categories as defined in Morningstar.
Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Writing call options involves the risk that the fund may be required to sell the underlying security or instrument (or settle in cash an amount of equal value) at a disadvantageous price or below the market price of such underlying security or instrument, at the time the option is exercised. As the writer of a call option, the fund forgoes, during the option's life, the opportunity to profit from increases in the market value of the underlying security or instrument covering the option above the sum of the premium and the exercise price but retains the risk of loss should the price of the underlying security or instrument decline. Additionally, the fund's call option writing strategy may not fully protect it against declines in the value of the market. While the fund will normally pay its income as distributions, the fund's distributions may exceed the fund's income and gains for the fund's taxable year. Distributions in excess of the fund's current and accumulated earnings and profits will be treated as a return of capital and may have a negative impact on the fund. The fund's ability to distribute income to shareholders will depend on the yield available on the common stocks held by the fund and the premiums received by the fund with respect to its written call options. Changes in the dividend policies of companies held by the fund could make it difficult for the fund to provide a predictable level of income. In addition, the premiums received by the fund with respect to its written call options will vary over time and based on market conditions. Securities selected using quantitative analysis can perform differently from the market as a whole as a result of the factors used in the analysis, the weight placed on each factor, and changes in the factors' historical trends. High portfolio turnover (more than 100%) may result in increased transaction costs and potentially higher capital gains or losses. The effects of higher than normal portfolio turnover may adversely affect the fund's performance. An ETF may trade at a premium or discount to its Net Asset Value (NAV). These alternative investment strategies may not be suitable for all investors and are not intended to be a complete investment program for any investor. There is no assurance that the ETFs will be profitable.
ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses.