The iShares Russell 2000 ETF (IWM) has gained 22.51% year-to-date, rewarding investors holding small-cap stocks with capital appreciation but low income yield under 1%. In contrast, the Roundhill Small Cap 0DTE Covered Call Strategy ETF (RDTE) offers a high 42.82% distribution yield by selling daily call options, paying weekly premiums but capping upside gains. RDTE’s total return lags slightly behind IWM due to option costs, and some distributions are return of capital, affecting tax treatment. A similar fund, ProShares Russell 2000 High Income ETF (ITWO), balances yield and growth with a 24% YTD return and moderate distributions. Investors may use covered-call ETFs like RDTE as partial income supplements while maintaining core IWM exposure, especially in tax-advantaged accounts. IWM remains the best low-cost choice for total return on U.S. small caps, while covered-call ETFs trade some upside for higher income and fees.
