Buy-Write funds underperformed the broader market rally in 2009.
According to the WSJ article Buy-Write Managers Feel a Chill, the PowerShares S&P 500 BuyWrite ETF (PBP) fell 30% in 2008 compared to the 37% decline for the S&P 500 Index. However, the fund trailed the benchmark index by two percentage points in 2009′s market recovery.
Buy-Write funds reduce risk by writing call options against stock positions. In down markets, losses are mitigated. However, in up markets, upside appreciation is capped.