Covered call ETFs may underperform in downturns

Covered call ETFs may underperform in downturns due to insufficient downside protection and poor risk-adjusted returns. These funds, particularly those selling short-duration calls, have shown subpar performance and weak risk metrics, failing to justify their risk profile. Recent large inflows into covered call ETFs may have suppressed volatility, potentially leading to amplified turbulence and exacerbated losses during a market selloff.