High-Yield UK ETFs in 2025: Income Opportunity or Illusion?

The Rise of High-Yield ETFs

In 2025, more investors are drawn to ETFs offering eye-catching double-digit yields. These often use covered-call strategies or focus on high-dividend stocks. For UK investors, funds like £JEQP and MSTY have become popular choices.

The question is: how sustainable are these yields, and what role can they play in a balanced portfolio?

I’ll break down five ETFs: £JEQP, MSTY, £SDIP, £YMAP, and £QYLP and simulate what a £100 investment might look like after three years.

My Current Holdings

£JEQP – JPMorgan Nasdaq Equity Premium Income UCITS

• Tracks the Nasdaq-100, selling out-of-the-money covered calls.

• Yield: ~10.75% | Fees: 0.35% | YTD return (mid-Sep 2025): +12.47%

• Efficient, UCITS-compliant, and relatively stable.

MSTY – YieldMax MSTR Option Income

• Linked to MicroStrategy, often seen as a Bitcoin proxy.

• Trailing yield: up to 179.88%, but 60.65% of payouts in Aug 2025 were return of capital (ROC).

• YTD return: +13.03% | High volatility, not tax-efficient for UK investors.

Together, these provide a mix of steady option income (JEQP) and speculative, crypto-linked payouts (MSTY).

New Options to Explore

£SDIP – Global Dividend Stability

• Strategy: 100 high-yield global stocks (REITs, utilities, financials).

• Yield: ~10.22% | Fees: 0.45% | YTD return: +9.23%

• Pros: Diversified, real dividends.

• Cons: Exposed to dividend cuts and currency risk.

£YMAP – Big Tech Covered Calls

• Strategy: Covered calls on AAPL, MSFT, NVDA, AMZN, META, GOOGL.

• Yield: ~23%, but part ROC | Fees: 0.99% | YTD return: +8.00%

• Pros: High payouts, tech exposure.

• Cons: High fees, capped upside, ROC risk.

£QYLP – Nasdaq Covered Call UCITS

• Strategy: At-the-money calls on Nasdaq-100.

• Yield: ~13% | Fees: 0.45% | YTD return: –12.91%

• Pros: Higher yield than JEQP, established track record.

• Cons: More upside capped, counterparty risk.

£100 Over 3 Years: The Simulation

If you reinvest everything based on headline yields:

But after adjusting for return of capital (ROC):

The apparent 100%+ yields shrink once ROC is stripped out.

Key Takeaways

• Diversification: JEQP and SDIP provide a steadier base; MSTY and YMAP are more speculative.

• ROC Matters: ROC distributions reduce NAV, inflating yield figures.

• Fees Count: JEQP, SDIP, QYLP (0.35–0.45%) vs. MSTY, YMAP (~0.99%).

• Tax Positioning: UCITS ETFs are generally more efficient for UK investors than US-listed MSTY.

• Market Conditions: Covered-call strategies perform best in sideways or volatile markets, not during strong rallies.

Final Thoughts

For 9–5 investors, high yields are tempting. But what looks like a 20%+ payout often includes return of capital rather than sustainable income.

• Anchor with JEQP or SDIP for stability.

• Use QYLP tactically for enhanced Nasdaq exposure.

• Treat MSTY and YMAP as speculative, not core holdings.

High-yield ETFs can play a role in an income strategy, but the difference between genuine dividends and return of capital is what really defines the outcome.

Disclaimer: This article is for informational and research purposes only and does not constitute investment advice. Always conduct your own research or speak to a qualified professional before investing.