Should we add KLIP to the Income Portfolio?
Should I Add KLIP to the Income Portfolio? The KraneShares KWEB Covered Call Strategy ETF (KLIP) has caught attention with its impressive ~24% annualized yield, paid monthly, making it one of the highest-yielding equity ETFs in 2025. However, given the trade-offs and risks involved, I am considering a very conservative allocation—potentially 1% of my income portfolio. Here is a detailed exploration of KLIP and why I’m choosing a cautious approach. What Is KLIP and How Does It Generate Income? KLIP invests in top Chinese internet stocks through KWEB, an ETF that holds giants like Alibaba, Tencent, and JD.com, covering China’s booming digital economy. The fund employs a covered call strategy selling at-the-money call options on KWEB shares, generating premium income from the sector’s high volatility. This premium income drives the fund’s extraordinary yield. In 2025, KLIP capped its monthly distribution at 2% of NAV, reinvesting excess income to improve payout consistency and NA...