The State Street sector ETFs nobody is talking about — and why I'm testing three of them
State Street launched 11 sector-specific covered call ETFs in July 2025. Most investors haven't heard of them. Here's why I'm paying attention.
Most of the covered call ETF conversation in the income investing community revolves around the same handful of names — YieldMax, NEOS, Roundhill. And for good reason. Those funds have track records, audiences, and content ecosystems built around them.
But in July 2025, State Street quietly launched something worth paying attention to: 11 sector-specific covered call ETFs, each built on top of their established SPDR sector funds — the same funds that have been institutional staples for decades. They added a covered call overlay and started generating monthly income from sectors most income investors had never touched.
I’m currently testing three of them in my own portfolio: XLUI (Utilities), XLII (Industrials), and XLBI (Materials/Chemicals). Here’s why I started looking at them and what I’ve found so far.
The gap these funds fill
My existing portfolio was heavily concentrated in tech and growth-adjacent covered call strategies. QQQI, SPYI, FEPI, CHPY, AIPI — these are all either directly tied to the Nasdaq, the S&P 500, or individual tech and semiconductor companies. When the tech sector sells off, most of my income engine sells off with it.
The question I started asking was: where are the covered call ETFs that generate income from sectors that don’t move with tech? Sectors that might actually hold up — or even benefit — when the Nasdaq is getting hit.
State Street’s XL suite was the answer.
Why sector-specific covered call ETFs are different
Most covered call ETFs use broad market indices — the S&P 500, the Nasdaq 100, or individual mega-cap stocks. When you own SPYI, your income and NAV are tied to the performance of 500 large-cap companies across every sector.
A sector-specific covered call ETF concentrates that exposure. You’re generating income from covered calls on a specific slice of the market — utilities, industrials, materials — rather than the whole thing. That concentration is a risk, but it’s also an opportunity: you can now build a genuinely diversified income portfolio where each position responds differently to different market environments.
A utilities covered call ETF behaves very differently than a tech covered call ETF in a rising rate environment. An industrials fund responds differently to infrastructure spending than a semiconductor fund does. That non-correlation is exactly what I was looking for.
The three I’m testing
XLUI — Utilities covered call. Utilities are domestic, regulated, and largely insulated from the kind of geopolitical and tariff-driven volatility that has hit the tech and materials sectors. When markets sold off hard during the March 2025 tariff announcements, XLUI barely moved. The NAV has been nearly flat since inception. The yield has been running around 19–20%.
XLII — Industrials covered call. Manufacturing, transportation, infrastructure. More economically sensitive than utilities but still diversifying relative to my tech-heavy existing holdings. NAV has been stable to slightly positive since inception. Yield running around 17%.
XLBI — Materials/Chemicals covered call. This one has the most direct tariff exposure of the three — chemicals and materials companies face real input cost pressure from trade policy. The NAV has shown modest erosion since inception, more than the other two. But the yield is real and the sector diversification argument still holds. I’m sizing this one smaller.
What I’m watching
I’m entering all three via DCA — adding weekly rather than deploying a lump sum. This gives me time to observe how each fund behaves across different market conditions before committing to a full allocation.
The expense ratio on all three is 0.35% — significantly lower than most of what I hold. State Street’s institutional infrastructure means these are well-managed, transparent funds without the black-box mechanics I avoid.
Full breakdown of each fund’s PLAN analysis is coming in the next paid issue.
→ Freedom Builder newsletter — free to start: newsletter.riconasol.com Paid subscribers ($9/mo) get the full PLAN analysis on all three XL funds.