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Financial advisors face persistent challenges: delivering reliable income amid market volatility, mitigating tax drags, hedging inflation, and balancing portfolios skewed by tech dominance. At the 2025 Schwab IMPACT Conference, Simeon Hyman, Global Investment Strategist at ProShares, shared actionable strategies through their innovative ETF lineup. ProShares, a pioneer in ETFs since 2006, offers tools like the High Income suite (ISPY, IQQQ, ITWO), dividend growers, tech-neutral options, and crypto exposure via BITO, all designed to enhance client outcomes without unnecessary complexity.
Revolutionizing Income with Daily Covered Calls
Traditional covered call strategies cap upside too aggressively, often delivering only half the S&P 500's returns or a third of Nasdaq's, as tracked by long-standing indices like the CBOE BuyWrite. ProShares addresses this with its High Income suite—ISPY (S&P 500), IQQQ (Nasdaq-100), and ITWO (Russell 2000)—which execute covered calls daily rather than monthly. This innovation leverages daily options trading, available for several years on major U.S. indices, to capture premium decay efficiently while minimizing call-away risk.
"You're selling away the upside of the stocks that you own. That's what the definition of covered call is," Hyman explained. "But when you do them on a monthly basis, what you find is the tradeoff is a little bit too extreme. What we saw as an opportunity was, several years ago, daily options began to trade. And once you do that on a daily basis, you can generate the income. But since you're doing it on a daily basis, if you're called away, you're still back in tomorrow, not 28 days from now."
These ETFs yield 10-12% in trailing 12-month distributions, providing immediate income while retaining substantial equity upside. Advisors can position them for clients seeking yield without fully sacrificing growth, especially in volatile environments where daily resets preserve participation.
Tax-Loss Harvesting Opportunities in Rising Markets
Even after multi-year bull runs, tax-loss harvesting remains viable within income-focused ETFs. Monthly covered call funds often distribute more than their total returns—e.g., 10% yield on 4-5% appreciation—leading to principal erosion and harvestable losses. ProShares' daily approach mitigates this effect but still offers pockets of opportunity, particularly as markets consolidate.
Hyman noted, "Folks may think, hey, the market's been up for several years, where am I going to find a loss to harvest for tax purposes? But back to those traditional monthly covered call strategies — they might be handing you 10% a year, in which case your price shows a loss, and you may actually have a tax loss to harvest in an unexpected place."
For 2025, advisors should scan High Income suite holdings against benchmarks, pairing swaps with core positions to optimize taxes without disrupting income streams. This tactic suits taxable accounts, enhancing after-tax returns in a year of potential year-end realizations.
Dividend Growth: Income Now and Later
Dividend growth ETFs complement covered calls as "income now and income later," delivering compounding payouts to combat inflation's residual pressure above 2%. ProShares' lineup includes NOBL (S&P 500 Dividend Aristocrats), REGL (midcaps), and SFDV (small caps), targeting firms with 25+ years of increases—proxies for quality via strong balance sheets and cash flows.
"Dividend growth offers the compounding of that dividend income over time, delivering important opportunities to grow the income and keep pace with inflation," Hyman said. "These are companies that consistently grow their dividends for long periods of time. If you just look at long histories of dividend growth, you capture all that."
In a market where non-Mag 7 stocks appear cheap, these ETFs elevate quality over equal-weighting the S&P 500. Advisors benefit from small-cap resurgence via SFDV, blending inflation protection with relative value plays.
Managing Tech Concentration Risk
Tech's 30%+ S&P 500 weight challenges strategic asset allocation, where "look out the window" baselines mirror market caps. Overweights in client portfolios from high-flyers amplify this. ProShares' SPXT (S&P 500 Ex-Technology ETF) strips tech entirely, enabling tactical tilts—e.g., 20-25% tech exposure versus 35%.
Hyman advised, "We offer an interesting, convenient opportunity to reduce that technology exposure through our ETF SPXT — a lot of people out there have some of those concentrated high flyers that can be a way to balance out the equity allocation."
Pair SPXT with growth sleeves for diversified equity, reducing volatility without zeroing out a major sector. This fits advisors' orthodox frameworks, preserving returns while de-risking.
Crypto ETFs: Diversification via BITO
Crypto skeptics view Bitcoin and Ethereum as equity-correlated risks, yet data shows diversification potential—Bitcoin rose amid 2022 institutional failures. ProShares' BITO (Bitcoin futures ETF) provides regulated exposure via futures, avoiding spot market novelties and grantor trust issues.
"Cryptocurrency can provide a diversifying role in the portfolio," Hyman highlighted. "What we do at ProShares is we have a suite that uses futures for that exposure — you're in the ETF structure — and the regulated futures market. Ours are simply '40 Act structures."
A small allocation (e.g., 1-5%) adds non-correlated alpha, with Ethereum's utility differentiating it from Bitcoin's "digital gold." Advisors gain structural advantages: no K-1s like commodities, daily liquidity, and 1940 Act protections.
2026 Outlook: Equity Income and Fixed Income Innovation
As Fed cuts erode money market yields and long bonds face upside rate pressure, equity-derived income surges. ProShares' option-based strategies like covered calls will expand, alongside fixed income tweaks in normalized 4% 10-year Treasury environments.
"Income from equity—option based, derivative based, things that shape returns—that's going to be a growing category. And also on the fixed income side there are opportunities for more fixed income strategies to deliver some real return," Hyman forecasted.
Advisors should prioritize these for clients shifting from cash, blending with dividend growers and tech hedges. ProShares' tactical suite positions portfolios for changing dynamics.
ProShares equips advisors with versatile, high-quality ETFs that address income, taxes, inflation, concentration, and alternatives head-on. Explore these strategies and products at ProShares.com to elevate client portfolios.
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