Building a nest egg and living off one are two different skills. Growth investing rewards patience through volatility. Income investing punishes it – a bad year doesn’t just show up on a statement, it cuts into money you’re actually spending. That difference is where most common misconceptions about retirement income take root.
Misconception #1: A high yield is “free” income
The most persistent myth about retirement income is that yield is simply a reward for owning a good asset. In reality, yield is compensation for a risk you’re taking on, and the risk isn’t always obvious. Sometimes it’s straightforward: longer-duration or lower-credit-quality bonds pay more because you’re locking up money longer or lending to shakier borrowers. Other times, the yield comes from giving something up entirely – most notably your upside. That’s exactly how covered call ETFs work.
Misconception #2: Owning several income funds means you’re diversified
A related myth is that stacking multiple income-generating positions automatically spreads out risk. But holdings that all react to the same economic force (say, interest rates) aren’t diversified just because they have different names. Real diversification means owning products that behave differently from each other, so when one zigs, another zags. A classic example: real estate and utility funds are both popular for their attractive dividends, but both sectors are highly sensitive to interest rates and tend to move together, so pairing them provides far less cushioning than it appears to be on paper.
This matters just as much when comparing entire fund strategies. In this piece, we’d like to present a look at three different funds: JEPI, HNDL, and SCHD. They each offer three very different approaches to retirement income.1
The Covered Call Trade: What JEPI Actually Gives You (and Takes Away)
The JPMorgan Equity Premium Income ETF (JEPI) is the largest fund of its kind, holding defensive, lower-volatility stocks while layering on income from equity-linked notes tied to the S&P 500. 2
The tradeoff shows up in bull markets. Because the strategy sells away the right to the market’s biggest gains in exchange for premium income, JEPI has historically lagged the S&P 500 by a wide margin over multi-year stretches, and in 2026’s strong rally its total return has trailed noticeably even after counting distributions. There’s also a tax wrinkle: income from equity-linked notes is generally taxed as ordinary income rather than at qualified dividend rates, which matters outside an IRA.
None of this makes JEPI a bad product – it does what it’s designed to do. The mistake is treating the 8% yield as “extra” return, rather than income harvested by trading away growth, which is a real cost over a retirement that could stretch 25 to 30 years.
HNDL: Income Without Giving Up the Upside
HNDL (the Strategy Shares Nasdaq 7HANDL Index ETF) was built to solve the income problem without making that trade. Rather than selling away upside for premium, it is a fund-of-funds built around a core stock/bond allocation paired with a tactically managed “explore” sleeve of income-oriented ETFs, using modest leverage to target an approximately 7% annualized distribution paid monthly. The distinction matters: because HNDL writes no options against an index, none of its upside is sold off. It stays fully invested across equities, fixed income and alternative assets, each of which can contribute to growth as well as income. A retiree collecting roughly 7% from HNDL is not paying for that income by forfeiting participation in the next rally.
We believe that structure is also far closer to genuine diversification. Rather than stacking income sources that all lean on the same risk — the rate-sensitive REIT-and-utility pairing described above — HNDL’s blend is explicitly engineered to spread exposure across asset classes that do not move together. It is diversification by design rather than by label. The Fund has paid its monthly distribution at the 7% target without interruption since its 2018 launch, through the 2020 crash, the 2022 drawdown in both stocks and bonds, and the recovery that followed — an eight-year record of uninterrupted monthly income that few income strategies of any structure can claim. It also trades on an exchange every business day, at a published price, with none of the gates, queues or redemption limits that come with a private REIT or an interval fund. For a retiree who needs the money to arrive on schedule and needs access to the principal, that combination of consistency and daily liquidity is the point.
The tradeoff worth knowing: the leverage and multi-layered structure add expense relative to a plain index fund, and they can make HNDL more sensitive to how its underlying holdings behave in a sharp, correlated downturn. That is a fair question to put to any diversified strategy, and it is one HNDL has now been asked in live markets more than once.
SCHD: The Lower-Yield, Higher-Growth Alternative
If JEPI and HNDL both engineer a higher current yield through options or leverage, the Schwab U.S. Dividend Equity ETF (SCHD) takes the opposite path: it simply owns quality dividend-paying businesses and lets the yield be whatever those companies naturally pay. SCHD screens U.S. companies with at least a decade of consistent dividends, then ranks them on financial strength, profitability, and dividend growth rather than raw yield, landing on roughly 100 established payers, rebalanced quarterly with an annual reconstitution.
The headline yield is modest by comparison (a little over 3%, well below JEPI’s roughly 8% or HNDL’s roughly 7% target). But that lower yield comes with real advantages. Because SCHD isn’t giving up upside through options or adding leverage, it fully participates in market gains, and in 2026’s rally it has actually outperformed the S&P 500 on a total-return basis. Its dividend has also grown at a healthy mid-to-high single-digit annual clip over the past five years, which matters over a multi-decade retirement where a fixed dollar amount steadily loses purchasing power to inflation. Its distributions are largely qualified dividends taxed at lower rates than ordinary income, its expense ratio is a fraction of a percent, and it trades on an exchange every business day with no lockups.
The tradeoff is the flip side of its strength: a 3% yield generates meaningfully less current income than JEPI or HNDL from a same-size portfolio, so a retiree relying heavily on portfolio income for near-term expenses may find SCHD alone doesn’t produce enough cash flow. It’s also concentrated in a value-and-dividend style that can lag a rally led by sectors it screens out.
Putting the Three Side by Side
The three funds sit at different points on the same spectrum. JEPI maximizes current income by selling away equity upside. SCHD minimizes engineered yield in favor of full market participation and dividend growth — less current income, but a stronger long-term growth engine. HNDL sits between the two by design, and arguably gets the most from both ends: it targets a yield close to JEPI’s roughly 8% while, like SCHD, keeping its upside intact, because it engineers that income through multi-asset diversification and modest leverage rather than by selling options. The cost is complexity and expense rather than forfeited growth. A portfolio built entirely around the highest yielder of the three is likely trading away more long-term purchasing power than it realizes.
What This Means in Practice
None of these three funds is inherently “wrong”, but none should be evaluated on yield alone. Before committing retirement dollars to any income fund, it’s worth asking:
- What’s the total return, not just the yield? A high distribution paired with price erosion can leave you worse off than a lower-yielding fund that participates in growth.
- Does it give up upside, keep all the downside, or both?
- Is the diversification real, or are the holdings all exposed to the same risk?
- How did it perform in genuinely different market environments – a sharp crash and a slow, grinding decline?
No single fund – covered call, leveraged multi-asset, or straightforward dividend growth – solves every part of the problem on its own. JEPI, HNDL, and SCHD each answer a different question: how much can I collect right now, how do I get meaningful income without giving up growth entirely, and how do I make sure my income keeps growing over a 30-year horizon. The goal isn’t the highest number on the yield line; it’s a mix that can keep paying you, and keep pace with the cost of living, through both good markets and bad ones.
Before you add or keep any income fund in your retirement portfolio, pull up its total return next to its yield, run it through the questions above, and see how it actually held up in 2020 and 2022. If you’re not sure how a specific fund stacks up, or how to blend a few of these approaches into one portfolio, that’s a conversation worth having with a financial advisor who can look at your full picture.
| Fund | Objective | Asset Class | Gross Expense Ratio | NAV (as of 8/4/26) | Inception | 30-Day SEC Yield (as of June 30) | Fund Risks |
|---|---|---|---|---|---|---|---|
| JEPI | Seeks to deliver monthly distributable income and equity market exposure with less volatility. | U.S. Equity | 0.35% | $57.39 | 5/20/2020 | 8.20% | click here |
| HNDL | Seeks investment results that correspond generally, before fees and expenses, to the price and yield performance of the Nasdaq 7HANDL™ Index. | Fixed Income/ Equities/ and Alternatives | 0.95% | $22.79 | 1/16/2018 | 2.54% | click here |
| SCHD | Seeks to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Dividend 100™ Index. | U.S. Equity | 0.06% | $33.94 | 10/20/2011 | 3.35% | click here |
1 The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 855-HSS-ETFS or visiting StrategySharesETFs.com. For HNDL standardized performance, click here. For JEPI standardized performance, click here. For SCHD standardized performance, click here. ↩
2 As of mid-2026 it’s paying a trailing distribution yield in the roughly 8% range on a steady monthly schedule – a big part of its appeal for retirees who want a predictable check. ↩
About Strategy Shares
Strategy Shares is a family of exchange traded funds (ETFs) focused on bringing alternative strategies to the ETF marketplace. The firm strives to provide innovative strategies that support investors in meeting the challenges of an ever-changing global market environment. For more information on Strategy Shares and its various offerings, please visit: www.strategysharesetfs.com.
NOTICE AND IMPORTANT DISCLOSURES:
The information provided in this article is for general informational purposes only and reflects general fund characteristics as of the time of this writing; it is not intended to provide personalized investment, tax, or financial advice. References to specific funds, securities, strategies, yields, distributions, performance, ratings, or characteristics are provided for educational purposes and should not be interpreted as a recommendation, solicitation, or endorsement of any investment product.
Investing involves risk, including the possible loss of principal. Income-focused strategies may involve tradeoffs, including reduced growth potential, market risk, interest-rate risk, credit risk, leverage risk, liquidity risk, and tax considerations. Distribution rates, fund yields, expense ratios, and investment strategies may change and should not be viewed as current, nor are any figures or returns guaranteed. Past performance, historical comparisons, and ratings are not indicative of future results.
Tax treatment varies based on individual circumstances and account type. Investors should consult their tax advisor regarding the tax implications of investment decisions. Before investing, individuals should carefully review a fund’s prospectus, objectives, risks, charges, expenses, and other important information, consider whether the investment aligns with their financial circumstances and goals, and consider speaking with a financial advisor about their specific situation.
The author, publisher, or affiliated parties may have relationships with certain investment products or issuers discussed in this article, including potential ownership interests, business relationships, or compensation arrangements. Any such relationships will be disclosed where applicable. Readers should consider this information when evaluating the discussion.
Please click here to view the HNDL Prospectus.
For more complete information on Strategy Shares, download and view a prospectus or summary prospectus now or call (855) 477-3837 for a free prospectus or summary prospectus. You should consider the fund’s investment objectives, risks, charges, and expenses carefully before you invest. Information about these and other important subjects is in the fund’s prospectus or summary prospectus, which you should read carefully before investing. Investing involves risk, including loss of principal.
There is no guarantee that this, or any investment strategy, will succeed. Shares of these ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the ETF. Brokerage commissions will reduce returns.
Investment in a fund of funds is subject to the risks and expenses of the underlying funds. Diversification and asset allocation may not protect against market risk or loss of principal. Certain sectors and markets perform exceptionally well based on current market conditions and the Nasdaq 7HANDL ETF can benefit from that performance. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such results will be repeated. The use of leverage can amplify the effects of market volatility on the fund’s share price and make the fund’s returns more volatile. The use of leverage may cause the fund to liquidate portfolio positions when it would not be advantageous to do so in order to satisfy its obligations. The use of leverage may also cause the fund to have higher expenses than those of funds that do not use such techniques.
HANDLS™ and HANDL™ are trademarks of Bryant Avenue Ventures LLC and have been licensed for use by Rational Advisors, Inc. Shareholders should not assume that the source of a distribution from the Fund is net profit. Shareholders should note that return of capital will reduce the tax basis of their shares and potentially increase the taxable gain, if any, upon disposition of their shares.
The Strategy Shares are distributed by Foreside Fund Services, LLC, which is not affiliated with Rational Advisors, Inc., or any of its affiliates.
Distribution Yield – Calculation NAV is the closing NAV prior to the Declaration Date that is used to calculate the 7.00% annualized target distribution.
All or a portion of a distribution may consist of a return of capital. Shareholders should not assume that the source of a distribution from the Fund is net profit. Shareholders should note that return of capital will reduce the tax basis of their shares and potentially increase the taxable gain, if any, upon disposition of their shares.
30-day SEC Yield: Represents net investment income earned by a fund over a 30-day period, expressed as an annual percentage rate based on the fund’s share price at the end of the 30-day period. The 30-day yield should be regarded as an estimate of investment income and may not equal the fund’s actual income distribution rate.
30-day SEC Yield (unsubsidized): Unsubsidized yield does not adjust for any fee waivers and/or expense reimbursements.