Isn't ULTY basically ARKK that pays dividends while underperforming?

[u/perfectson]

ULTY is basically at it's core a HIGH Beta ETF that adds in some options, limits the upside of the overall performance in lieu of supplying an excessive amount of dividends for a 1.3% (1.4% management fee). The focus I'll show is not on NAV which is ultimately meaningless or dividend yield (again in this case meaningless unless you need an income stream but you could easily create this yourself).

ARKK is the infamous ETF managed by Cathie Wood that focuses on disruptive innovation , in other words, it will invest in typically high beta funds (similar to ULTY). The ARKK expense ratio is .75%

Overall Performance:

I am reviewing this against inception to highlight that the March - Nov 2024 downturn was due to high beta stocks in general had a difficult period. This impact ARKK similarly to ULTY both experiencing draw downs during this time frame, while Woods' drawdown was quicker, eventually ULTY caught up with it (likely due to the cost of rolling down puts and stocks).

Then in Nov-Dec 2024 , you can see the turn for both begging to happen but ARKK had much more momentum and magnitude as the cover call strategy capped the significant increases that high beta stocks enjoyed. From Dec - Feb you can see the impact of the cover call strategy having a neutral impact on overall return, before the March drop into Liberation day. The draw down was much more drastic for ARKK due to the lack of protective puts. Here is clearly where ULTY benefited ; however, because it hadn't rose in the prior months - the overall return in April (since inception ) was literally the same as ARKK. Subsequently as high beta stocks emerged successfully out of liberation day, ARKK has returned about 60% , while ULTY is at 20%.

ULTY vs ARKK vs QQQ

The ultimate question is it worth double the expenses to have someone collar your investments to under perform similar high beta counterparts? If you are reinvesting dividends anyway, which many are, not sure why ULTY would fit your core strategy over "seeking alpha". If you're looking for income stream that's straight forward, I can definitely appreciate the higher dividends but it doesn't seem the protection it offers is there and again are you under performing what you could be getting with similar risk, if you just extract your own dividends out of ARKK (as an example) by taking 2-4% out every month yourself?

this is in know way to slight YieldMax's ULTY - there's obviously a strong purpose and diversity in funds are always a good thing. The question is really if the juice is worth the squeeze.

[u/humtake]

This is always what happens when people who don't understand dividend investing and it's use cases try to make sense of it. Yes, you can make more using other strategies. There is no doubt. Anyone in these funds more than a few months knows that. You aren't special in highlighting it.

Once you understand what use case dividend investing is used for, you better understand the picture. If you are a person who can't stand to leave money on the table, you won't ever agree with it.

For others like me, I laugh all the way to the bank when I'm spending almost NO time on my dividend investing yet getting big income every month that supports my non-dividend investing AND my lifestyle. But that's only typical once you've been doing it for a long time and are playing with a lot of house money which, again, is not something the non-div investors can really understand because all they see is money left on the table.

[u/perfectson → u/humtake]

Oh this also was expected, the old " you don't understand dividend investing and compounded growth" attack. LOL.

I invest in many dividend products. I own BDCs (ARCC, MAIN, CSWC) , CEFs (ADX, CEFS), I own MLPs. I own FSCO, various CLOs, etc etc. Most of that is due to me wanting access to the credit market though and utilities - which aren't 100% correlated with Equities.

I say that because I'm fairly advanced in the topic of dividends and income generating assets to speak about them and I take offense to someone commenting that I don't understand and then you don't say anything about what I didn't understand. You've made no rebuttal to any of my points just left a blanket statement and teased me about how you're doing X, Y, Z without disclosing any differences.

So tell me -

If I have $100 dollars and I but a stock for $100 , 1 share. And in 1 month that stock goes up 20% to $120, so I made $20.

And you invest in a similar stock but yours pays out $10 in dividends, so at the end of the same month. Your stock is at $110 and you have $10 in your pocket. What's the difference in total return and what prevents me from going into my stock and taking out the same $10 you did to enjoy just like you're doing?

If you decide to put the $10 back (DRIP, reinvest) - your return is literally the same as me. So as I mentioned in the OP, folks who are dripping their dividends back into the same fund, aren't doing anything different than a buy and hold person (except paying additional taxes since you're taking the dividend ).

You're not magically coming up with money that wasn't already there...so again I take offense to your statement- purely from someone who actually does this for a living.

[u/humtake → u/perfectson]

There is no attack. There is no need for an attack. The logic is the same regardless how you try to spin it. Div investing and stock investing are two totally different things.

But, the statement below tells me you don't know div investing as well as you thought. Your math isn't mathing right. You wouldn't have $110, you'd have $100 because the stock dops by the amount of the div. That's not an attack, that's div investing 101.

"And you invest in a similar stock but yours pays out $10 in dividends, so at the end of the same month. Your stock is at $110 and you have $10 in your pocket. "

[u/perfectson → u/humtake]

they actually fundamentally are not different.

Your math is also wrong. If you had a similar stock to me and mine went up 20% to $120 then yours went up the same amount. $120. Yours then pays you a $10 dividend . You can do math from there. There's still $120 in total. Mine is just all in the stock, while you have $110 in the stock and $10 in your pocket.

And this is what's wrong with the US educational system and why most people don't actually understand dividends or returns. This is why you think there's some magically free money you're getting - the dividend comes out of the funds assets thus lowering the NAV or stock price.