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Income-Generating ETFs Offer Higher Yields Than Treasurys

Investors looking to boost retirement income are weighing ETF strategies against the 5.25% yield of 10-year Treasury notes.

Updated on Oct. 15, 2026 in Investing

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Investors are increasingly turning to income-generating ETFs to outperform the 5.25% yield currently offered by 10-year U.S. Treasury notes. AI Illustration. Upload story photo >

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Asset managers recently explored evolving strategies for fixed-income and income-generating ETFs at the Nasdaq-VettaFi Asset Allocation Summit. With current market conditions driving investor interest, households are evaluating how these vehicles compare to traditional Treasury yields for retirement planning.

Why it matters

Rising costs and the complexity of retirement planning have pushed investors to look beyond traditional bonds for income. These products offer varying yield structures compared to standard 10-year Treasury notes, which are currently yielding 5.25%.

The 10-year Treasury yield currently sits at 5.25%, while seven-year corporate bonds offer approximately 7%. Meanwhile, some income-generating ETFs, such as the iShares NASDAQ Premium Active Income ETF, provide yields in the 9% range.

The players

BlackRock

An asset management firm that provides a variety of iBond ETFs with fixed maturity dates.

Fidelity

A financial services firm offering AAA CLO ETFs that utilize floating rates.

WisdomTree

An asset management firm providing various exchange-traded fund investment products.

The details

Income-focused ETFs utilize different mechanisms to enhance returns beyond standard government yields. The iShares NASDAQ Premium Active Income ETF, for example, generates income by selling volatility through covered calls on NASDAQ 100 stocks. Conversely, floating-rate products like the Fidelity AAA CLO ETF adjust their payouts based on a reset schedule, which for this product occurs every 30 days.

Timeline

  1. 2022: Interest rates were near zero.

  2. October 2026: The Nasdaq-VettaFi Asset Allocation Summit took place.

  3. 2032-2033: Maturity dates exist for specific iBond ETFs.

Money Landscape

Investors are currently operating in a significantly different landscape than the near-zero interest rate environment of 2022. This shift has prompted a move toward higher-yielding, income-generating ETFs as a primary tool for retirement planning.

Households considering these ETFs should review how their underlying assets generate income, such as covered calls or floating-rate debt, to ensure they match their risk tolerance. Investors should discuss the potential for capital volatility and tax implications with a tax professional.

The takeaway

Income-generating ETFs now provide yield alternatives to traditional Treasury bonds, which currently sit at 5.25%. Investors should review the specific payout mechanisms of these products and discuss their retirement planning goals with a qualified financial advisor.

Further reading

For more on building a balanced portfolio, review our Investing section.

Source note: This article includes information reported by ETF Trends.

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Is now a good time to increase your allocation to fixed income investments?