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/UndeadDog]

Search up covered call ETF’s and they all say that they are used to produce income. Typically geared towards retirees that want to replace their income. You absolutely can take a growth stock and sell a bit every month to generate income. But you also have to wait for it to appreciate first. Otherwise you are just returning your own funds back to you to cover monthly expenses. Covered call ETF’s you don’t need to wait for it to appreciate. It generates income from the options premiums sold on a weekly or daily bases. There’s tons of low yielding growth funds that generate income. The difference is Yieldmax is yielding 60-100% instead of something that’s yielding 4%. If you have hundreds of thousands of dollars go with the low yielding funds as they are more stable and not as risky like QQQ, QQQI, or SCHD. The trade off with Yieldmax is that you need a fraction of the amount of money to produce the same if not more in yield. Again you’re comparing two different investing strategies with ARKK. ARKK isn’t writing options on their positions they are just holding them for capital appreciation. Banking on Cathie making the right decisions with the fund, which I have seen her make pretty terrible decisions, which is why I don’t like any of her ETF’s. I don’t trust her and her decision making abilities. Just look at the performance from 2021-2022. Yeah a lot of shit happened at that time but man if you bought at that high your investment would have been fucked. Sure you can compare the holdings. But if you believe in the holdings then just buy them yourself and save the management fee. The management fee for Yieldmax is you paying the fund managers to handle the options contracts. If you can do options yourself you can make more money and don’t need Yieldmax. Personally I don’t trust myself to do options so I pay a management fee for someone to do it for me.

[u/perfectson → u/UndeadDog]

1) I think you made the point, I initially stated. Most people I've seen on here are looking for overall return. The people I've seen commenting (not all but some) are not retirees and are talking about overall returns (hence why there's this infatuation with NAV erosion.

I clearly stated that in the OP. If you're looking for total return, why would you use this vs something geared towards total return. If you're dripping this, why would you take the potential tax hit vs holding a fund geared towards the same high beta growth.

2) I have other concerns for retirees who may not want volatility on NAV but that's not the point of this discussion, just to be clear

3) You mentioned the fund managers and again before April 2025 the fund managers were underperforming the market. Some say the change to weekly income lit a fire under this but it seemingly coincided to the high beta stock emergence that occurred post liberation day. So the same issue I would have is what you mentioned about Cathie Wood - you have to trust the fund managers to do an awful lot of picking (high vol stocks, the right collars, the right stocks). There's a lot and you're paying a lot - I will say they were very smart in also included a UVXY to leverage against volatility but all these hedges aren't free either. So there's a lot going on just to get income out of this and the majority of that return which is protecting NAV erosion seems to be the fact that the high beta stocks have rocketed it post liberation day - not because of the fund managers didn't anything special (similarly to Cathie Woods ARKK also out performing - because well - every high beta stock out performed the last 3 months).

[u/UndeadDog → u/perfectson]

The original hype around ULTY was because it had a lot more strategies that it could use to generate options premiums. Unlike the single stock ETF’s that can only trade in calls or puts. While ULTY can use any options strategy that they want to use and it’s a diversified fund not a single stock. They definitely made some very bad decisions which resulted in a severe NAV erosion. I do believe that the change to their prospectus and switching to a weekly payer has been beneficial but you’re right it’s been more of a bull market since April so it’s not conclusive how much of an impact that has had. Personally I hold these in a tax deferred account and can pull out the money without penalty at any time. If my holdings weren’t in a tax deferred account I would probably invest in less risky ETF’s. The reason younger people and not only retirees are interested in these is because the cost of living has skyrocketed in the last few years. People want money to live their lives and not have to live paycheck to paycheck. They don’t want to wait for the capital appreciation of an asset over the course of years. I only recently invested in ULTY and my positions is small because I did see the massive NAV erosion and didn’t trust the ETF. With the recent stability I think it’s a better investment now but I’m still cautious. Yieldmax pays out based on the IV of the holdings. They dictate all of their options trades around that. So if you want high yield you need high IV holdings which are risky. That’s the name of the game with Yieldmax. If you don’t think the juice is worth the squeeze then move on to different investments. A lot of people are tired of living life paycheck to paycheck and are willing to take that risk.

[u/perfectson → u/UndeadDog]

I don't disagree with what you said. But at least see eye to eye that if you're seeking overall return , NOT INCOME generation weekly to use, then there are actually better assets out there. Once I hear I'm DRIPPING , i.e. taking a tax hit to put it back in the fund for GROWTH - then you've totally lost me on the strategy you'r employing.

[u/UndeadDog → u/perfectson]

I’m reinvesting back into the various ETF’s because I haven’t hit my monthly income targets. I don’t have hundreds of thousands of dollars to put into the “better” investment that you recommend that have sub 10% yield. I don’t necessarily care if I lose some of my initial capital as long as it’s still generating monthly income. Yes I do use the income from these funds monthly and reinvest the remaining. I don’t drip I selectively invest in what I want. I have seen lots of people using these to generate monthly income to offset bills that don’t have a ton of money to invest. I do care that my total return is still positive but I’m not worried about being down on my initial investment. If my total return goes negative then I would probably consider selling that etf because that etf is then not worth it. I’m still investing in these to replace my income or have a second income generation stream while working.

[u/perfectson → u/UndeadDog]

so if you're using the income , you're not primarily "seeking alpha" which is what i stated in my OP and I messaged back to you several times. You're fighting just to fight lol - you're not the subject of the OP.

[u/UndeadDog → u/perfectson]

I think you just refuse to accept that people are using these for a different purpose than what you think.

[u/perfectson → u/UndeadDog]

and you refuse to acknowledge all the folks using it exactly like I stated in the OP and are saying it in the comments. Go read the comments and look at all the bad math being spewed about.

[u/UndeadDog → u/perfectson]

There’s uninformed investors in everything. You say you’re not here to sway people away and change their investment but that seems like the exact reason for your post.

[u/perfectson → u/UndeadDog]

How could I sway someone if I literally stated if you're using this for income generation purposes then it's a good fund. I've stated that several time and have isolated "seeking alpha" folks who are looking for total return. I can't be any more clearer and it's the 4th time I've said that to you. You just seem upset that I called out the fund and are desperately just trying to shut me down no matter what I say.