A covered call ETF focusing on international dividend stocks has delivered stronger total returns than a major Vanguard fund over the past 3.75 years, challenging the conventional wisdom that income-focused strategies sacrifice long-term growth.

What happened: The Amplify CWP International Enhanced Dividend Income ETF (IDVO) returned 21.54% annualized over the 3.75-year period from Sept. 8, 2022, through June 8, 2026, outperforming the Vanguard Total International Stock ETF (VXUS), which returned 18.22% annualized over the same period. IDVO carries a 6.08% annualized distribution yield and uses a covered call strategy (selling options on individual stocks) to generate approximately 3% to 4% from dividends and another 2% to 4% from option premiums.

Why it matters: Many investors dismiss covered call ETFs because they assume high yields come at the cost of growth, yet IDVO has largely avoided that trade-off. A $10,000 investment at the start of the test period would have grown to approximately $20,774 in IDVO versus roughly $18,724 in VXUS. This suggests a well-constructed income strategy with selective option writing can outperform passive alternatives even while charging a higher expense ratio (0.65% versus 0.05%).

What to watch: IDVO currently holds a five-star Morningstar rating in the derivative income category and has returned 35.47% over the trailing one-year period. The fund concentrates its portfolio into roughly 30 to 50 holdings drawn from the MSCI ACWI ex-U.S. Index, focusing on high-quality large-cap companies with dividend-growth potential, which differs markedly from the broad diversification approach of competing covered call ETFs.