The 11 State Street XL covered call ETFs — which sectors are worth your attention
State Street launched a full suite of sector-specific income ETFs. Not all 11 are worth owning. Here's how I'd evaluate each one.
When State Street launched their sector covered call ETF suite in July 2025, they didn’t launch three or four funds. They launched eleven. That’s a covered call ETF for every major SPDR sector — and not all of them are worth your attention.
I’m currently running three of them (XLUI, XLII, XLBI) and here’s how I’d think about the rest.
The full XL covered call suite
State Street built these funds on top of their SPDR sector ETFs — the same institutional-grade sector funds that have been around for decades. The covered call overlay generates monthly income. The expense ratio across the suite is 0.35%.
The ones I’m watching most closely:
XLUI — Utilities. Already running. Highest yield, best NAV stability, most non-correlated to my existing holdings. For most income investors, this is the first XL fund worth adding.
XLII — Industrials. Already running. Reshoring trends, infrastructure spending, and defense budgets all support this sector. Good diversification from tech.
XLBI — Materials/Chemicals. Already running. Most tariff-exposed of the three. Sized smallest. Worth watching as trade policy evolves.
XLVI — Healthcare. I haven’t added this yet. Healthcare is defensive — similar to utilities in its insulation from economic cycles. The covered call premiums on healthcare stocks are meaningful and the sector has strong demographic tailwinds. This is next on my watchlist.
XLFI — Financials. Interesting because financials benefit from elevated rate environments that often hurt other sectors. A covered call ETF on banks and financial services could be useful for rate cycle diversification.
XLSI — Consumer Staples. Defensive, low-volatility sector. Similar rationale to utilities. Lower yield potential but high stability.
The ones I’d approach with more caution
Energy sector XL fund. Energy is commodity-driven and geopolitically sensitive. The volatility generates premium income but the NAV can move dramatically with oil prices. Worth understanding before adding.
Technology sector XL fund. Given that most of my existing Bucket 2 is already tech-adjacent, adding a tech-specific covered call ETF would increase concentration rather than diversify it. This one I’d actively avoid for my specific portfolio.
The honest framework for evaluating any sector covered call ETF:
Does this sector move independently from what I already own? If the answer is no, the diversification argument doesn’t hold regardless of how attractive the yield looks. If the answer is yes, run it through PLAN and size it appropriately.
→ I’ll be publishing PLAN analyses on each new XL fund I add in the paid newsletter: newsletter.riconasol.com $9/mo · Paid subscribers get every new position analyzed before I deploy capital.