Prices to Nov 3, 2026 · paper tracking starts Nov 4, 2026.

Strategy Lab · Balanced & income

Income rotation with a return-of-capital guard

ETFIQ rule, 2026

Balanced & incomeRisk onHypotheticalNext rebalance Dec 1, 2026

At the Nov 3, 2026 close Income rotation with a return-of-capital guard is risk on and holds QYLD 25%, XYLD 25%, HYG 25% and 1 more. Hypothetical back-test since 2016: +3.2% a year against SPY’s +15.1%, deepest fall −26.1%.

IQ · Nov 3, 2026

Scorecard window, Nov 11, 2016 to Nov 3, 2026

Paper recordNot startedStarts Nov 4, 2026

Back-test, a year+3.2%vs SPY +15.1%

Max drawdown−26.1%vs SPY −31.8%

Sharpe0.11vs SPY 0.76

Turnover230%a year

Funds4held now

Growth of $10,000

Nov 2016 to Nov 3, 2026 · after costs

Nov 3, 2026Back-testStrategy$13,611+36.1%SPY$41,890+318.9%

$10,000$20,000$41.9k$13.6k

Nov 2016Nov 2018Nov 2020Nov 2022Nov 2024Nov 2026

StrategySPYBack-testPaper record

Drawdown

Fall from the last high

Strategy worst −26.1%SPY worst −31.8%

−30%−20%−10%0%

Nov 2016Nov 2018Nov 2020Nov 2022Nov 2024Nov 2026

Rolling 12-month return

+9.1%+13.6%

0%+10%+20%+30%+40%

Nov 2024Jul 2025Mar 2026Nov 2026

Rolling 12-month Sharpe

1.170.92

0.01.02.0

Nov 2024Jul 2025Mar 2026Nov 2026

Holdings now

Nov 3, 2026 close

QYLDGlobal X NASDAQ 100 Covered Call ETF25.1%XYLDGlobal X S&P 500 Covered Call ETF25.1%HYGiShares iBoxx $ High Yield Corporate Bond ETF25.0%SPYDState Street SPDR Portfolio S&P 500 High Dividend ETF24.7%

Signals

Each month hold the four highest-yielding of ten income funds whose price has not fallen more than 5% in a year.

4 in · 6 out

Nearest to flipping

FundYieldRankDistance to flipState

QYLD+12.0%no flipIn

XYLD+10.3%no flipIn

HYG+6.1%no flipIn

PFF+5.8%no flipGuarded

LQD+4.9%no flipGuarded

FundYieldRankDistance to flipState

QYLD+12.0%no flipIn

XYLD+10.3%no flipIn

HYG+6.1%no flipIn

PFF+5.8%no flipGuarded

LQD+4.9%no flipGuarded

SPYD+4.2%no flipIn

DVY+3.3%no flipOut

HDV+3.1%no flipOut

SCHD+3.0%no flipOut

VYM+2.3%no flipOut

Each bar shows how far a fund is from flipping. Nov 3, 2026 close.

Trade blotter

Date	Action	Fund	Price	Weight	Reason	Record
Sep 30, 2026	In	SPYD	at close	25.0%	Rule added it. Next close, after costs.	Back-test
Sep 30, 2026	Out	PFF	at close	0.0%	Rule dropped it. Next close, after costs.	Back-test
Dec 31, 2025	In	PFF	at close	25.0%	Rule added it. Next close, after costs.	Back-test
Dec 31, 2025	Out	LQD	at close	0.0%	Rule dropped it. Next close, after costs.	Back-test
Nov 28, 2025	Out	PFF	at close	0.0%	Rule dropped it. Next close, after costs.	Back-test
Nov 28, 2025	In	LQD	at close	25.0%	Rule added it. Next close, after costs.	Back-test
Oct 31, 2025	In	XYLD	at close	25.0%	Rule added it. Next close, after costs.	Back-test
Oct 31, 2025	Out	SPYD	at close	0.0%	Rule dropped it. Next close, after costs.	Back-test
Oct 31, 2025	In	QYLD	at close	25.0%	Rule added it. Next close, after costs.	Back-test
Oct 31, 2025	Out	LQD	at close	0.0%	Rule dropped it. Next close, after costs.	Back-test
Aug 29, 2025	Out	XYLD	at close	0.0%	Rule dropped it. Next close, after costs.	Back-test
Aug 29, 2025	In	SPYD	at close	25.0%	Rule added it. Next close, after costs.	Back-test
Aug 29, 2025	Out	QYLD	at close	0.0%	Rule dropped it. Next close, after costs.	Back-test
Aug 29, 2025	In	LQD	at close	25.0%	Rule added it. Next close, after costs.	Back-test
Jul 31, 2025	Out	SPYD	at close	0.0%	Rule dropped it. Next close, after costs.	Back-test
Jul 31, 2025	In	QYLD	at close	25.0%	Rule added it. Next close, after costs.	Back-test
Apr 30, 2025	In	SPYD	at close	25.0%	Rule added it. Next close, after costs.	Back-test
Apr 30, 2025	Out	LQD	at close	0.0%	Rule dropped it. Next close, after costs.	Back-test
Mar 31, 2025	Out	QYLD	at close	0.0%	Rule dropped it. Next close, after costs.	Back-test
Mar 31, 2025	In	LQD	at close	25.0%	Rule added it. Next close, after costs.	Back-test
Nov 30, 2023	In	PFF	at close	25.0%	Rule added it. Next close, after costs.	Back-test
Nov 30, 2023	Out	LQD	at close	0.0%	Rule dropped it. Next close, after costs.	Back-test
Oct 31, 2023	Out	PFF	at close	0.0%	Rule dropped it. Next close, after costs.	Back-test
Oct 31, 2023	In	LQD	at close	25.0%	Rule added it. Next close, after costs.	Back-test

No paper trades yet: the first night is Nov 4, 2026. Back-test changes below, after costs.

Monthly returns

% · Last 12 months, the latest to Nov 3

Dec 2025	Jan 2026	Feb 2026	Mar 2026	Apr 2026	May 2026	Jun 2026	Jul 2026	Aug 2026	Sep 2026	Oct 2026	Nov 2026
0.9	1.2	0.1	−2.2	3.9	1.2	0.3	−0.2	1.7	−0.5	1.5	−0.2

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Year	SPY
2026*	1.2	0.1	−2.2	3.9	1.2	0.3	−0.2	1.7	−0.5	1.5	−0.2		6.9	11.5
2025	1.7	−0.2	−3.8	−0.8	1.1	1.9	1.0	1.0	0.8	−1.0	0.6	0.9	3.2	15.9
2024	1.8	1.3	1.3	−2.0	1.8	1.0	1.2	2.5	2.0	−0.4	2.2	−0.1	13.4	26.8
2023	2.1	−4.4	−0.6	0.9	−2.4	0.8	2.1	−1.6	−2.5	−1.7	4.8	2.7	−0.1	26.2
2022	−3.5	−1.3	1.9	−3.9	2.7	−8.2	3.8	−2.8	−9.1	5.5	5.9	−3.3	−12.8	−18.2
2021	−0.4	0.6	2.8	1.5	1.3	2.0	0.0	2.1	−2.1	3.4	−1.7	3.8	14.1	28.7
2020	0.3	−5.5	−11.8	−1.1	0.6	−1.0	2.0	1.3	−1.2	−0.6	6.1	2.5	−9.1	18.0
2019	0.1	1.2	1.7	1.4	−2.9	3.4	0.7	−1.4	2.1	0.4	1.5	1.7	10.2	32.8
2018	0.7	−0.4	−1.6	0.9	1.6	0.4	2.0	2.0	−0.2	−3.4	0.5	−6.9	−4.5	−5.4
2017	1.8	1.9	0.1	0.8	0.9	0.7	1.1	0.0	1.0	0.7	1.4	0.6	11.4	21.7
2016											1.6	1.1	2.7	6.6

Scorecard

vs SPY · back-test Nov 11, 2016 to Nov 3, 2026 · after costs

+3.2% a year vs SPY +15.1%.Max drawdown −26.1% vs −31.8%.

Return

MeasureStrategySPYEdge

Total return+36.5%+308%SPY

Annualised+3.2%+15.1%SPY

Risk

MeasureStrategySPYEdge

Volatility10.9%17.1%Strategy

Max drawdown−26.1%−31.8%Strategy

Upside capture35.0%100.0%SPY

Downside capture65.0%100.0%Strategy

Beta0.561.00Lower

Risk-adjusted

MeasureStrategySPYEdge

Sharpe ratio0.110.76SPY

Sortino ratio0.141.10SPY

Calmar ratio0.120.47SPY

Alpha, a year−6.0%n/aSignificant

Costs and taxes

MeasureStrategySPYEdge

Turnover, a year230%n/a

Cost drag, a year−0.07%n/a

Tax drag estimaten/an/a

Ratios use the 13-week Treasury bill rate, 2.5% a year, from the Treasury’s daily rates. Tax is not measured. Method

The Skeptic's take

0 daysof paper record. The rest is a back-test.

t = −3.57Alpha of −6.0% a year is significant, on back-test data.

230%turnover a year. Costs take 0.1 points.

MethodSource, rules, funds and limitsOpen ↓

SourceETFIQ measures (2026). Income rotation with a return-of-capital guard. ETFIQ. ↗

VersionRules v1 · sha ba68a516 · data to Nov 3, 2026How we test strategies

Exact rules

Each month hold the four highest-yielding of ten income funds whose price has not fallen more than 5% in a year.
A rule reads the close of the last trading day of the month and trades at the next close.
The universe is 10 funds; the benchmark is SPDR S&P 500 ETF Trust (SPY).
It is checked at each month end.

What we cannot measure

Past return-of-capital shares are not on file for most funds. The back-test guards with the price erosion test; the paper record adds each fund's latest filed return-of-capital share when ETFIQ has one (data/tax.json, dated).
Taxes, which for income funds are material.

Fund list · 10 funds

SCHD VYM HDV DVY QYLD XYLD SPYD HYG PFF LQD

Cite this pageCitation, APA and Markdown

ETFIQ Strategy Lab, Income rotation with a return-of-capital guard, data as of Nov 3, 2026. https://etfiq.com/models/strategies/income-rotation/

Computed by ETFIQ from Tiingo daily prices. Data sourced by Tiingo.

Open data Free to use with attribution

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