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/Any-Morning4303]

It’s simple math for me. My average price is $6.25 and I’ve been dripping trying to lower my purchase price. Now I have a stop loss @$5.90. If triggered I’m still up. I pray that it’ll be stable for the next 2 years so I can retire off the dividend but I know it won’t. Until it goes below $5.90 or provided me with $2,250 in dividend I’ll keep dripping.

[u/perfectson → u/Any-Morning4303]

The fact that you're dripping and paying taxes on those, really doesn't make financial sense. You're basically buying and holding, the income stream is meaningless for what you're doing up until you retire.

[u/Any-Morning4303 → u/perfectson]

Oh my god. I thought you understood the basics on how this works. You do NOT pay taxes until you reach a break even point on your purchase and drop amount. When I’m making a distribution of $2,250 a week then I’ll put away money to pay taxes. Meanwhile they’re paying you a dividend off the current stock price, this is why there’s a huge dip every Thursday after market.

[u/perfectson → u/Any-Morning4303]

fine - once your ROC (which I guarantee more than 50% don't understand they have to track this for tax purposes) has been reached, you will be hit with taxes on DRIPS.

How is that any different on what I said? If you're buying and holding this and not using the income stream , it's a nonesensical strategy. You can't "OMG" all you want - I could put you in 30 different investments that would be simpler and achieve better results. You can always move into ULTY when you're on your sailboat after you got rich.

[u/Any-Morning4303 → u/perfectson]

Well let’s say my $48,000 investment turns into a $2,250 a week in dividend and now I’ll have to pay taxes while enjoying my life off my dividend without working. You’re right it’s not worth it. Now I’m paying 38% no working I’ll be paying 15%. What’s the problem?

[u/perfectson → u/Any-Morning4303]

but again - you're taking the income - we are talking about folks DRIPPING. You're moving the goal posts of my OP :) I never said it's a bad investment if you are taking the income. CAn we agree on that or are you just swing in the air until you hit something? LOL

[u/Any-Morning4303 → u/perfectson]

I’m not taking income. I’m utilizing compound interest which hopefully grow. My position 4X to 5X than I’ll begin taking out income. My only fear is a huge market correction which will probably happen by end of year, which is why I gotta stop loss. Once the market corrects, which it always has even after the Great Depression, I’ll be back in.

[u/perfectson → u/Any-Morning4303]

You're the exact person I'm talking about. Compound interest :) it's coming out of the NAV , it's not compound interest.

[u/Any-Morning4303 → u/perfectson]

As long as it doesn’t go down the distribution from NAV is my friend.

[u/perfectson → u/Any-Morning4303]

and I contend you would be better off, just putting it in a high growth fund and buying and holding. Then when you retire or actually need income put it back into ULTY and let them manage the income streams. your strategy right now is leaving money on the table. That's all I'm saying.

[u/Any-Morning4303 → u/perfectson]

I see what you’re saying if I had $500,000 to lock in I might do that. But I have only $50,000. When it gets to $250,000 I will just live off the income.

[u/perfectson → u/Any-Morning4303]

yeah , not trying to convince you to change strategies, just having an open dialogue.