Derivative income ETFs are gaining momentum with financial advisors as firms broaden their income-generation strategies amid ongoing market volatility and shifting client expectations. Cerulli Associates reports that 15.2% of advisors used derivative income strategies in 2024, with another 7% planning to adopt them, led by strong uptake in wirehouses and increasing interest across independent and regional broker-dealers.

Defined as liquid alternatives that generate income through option-selling, these ETFs drew $26 billion in net inflows in 2023 and $29 billion in 2024, with advisor demand expected to continue rising.

Cerulli notes that inflation-beating returns and expanding issuer participation are driving growth, as the ETF structure reshapes how income-oriented solutions are designed and delivered.

Finsum: Defined outcome ETFs are also expanding, as investor demand for downside protection and predictable outcomes continues to strengthen.