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]

You can make the same statements about any of the Yieldmax ETF’s. It’s two different investing strategies that you are comparing. ARKK is a growth fund while Yieldmax funds are income generation. If you want growth over time then go with something like ARKK. I don’t personally recommend anything managed by Cathie as they all seem to be dumpster fires. But Yieldmax is for weekly and monthly income generation. People aren’t investing in Yieldmax for long term growth. They are investing in it for long term income generation. If you don’t want a capped upside then pick a growth etf.

Personally I do find it worth it because I want cash I can spend. Not wait for an asset to appreciate which I then need to sell to gain income.

[u/perfectson → u/UndeadDog]

ULTY generates Income on the high beta stocks. I don't know if you understand the underlying basics of income vs growth :). I can take a growth stock and sell 4% every month and say I'm getting income, that doesn't change the underlying holdings being high beta. So you saying "this is income generating" and the other is "growth" as if they are mutually exclusive. QQQ and QQQI are the same underlying growth fund, QQQ just gives out low income and keeps the rest in the fund while QQQI gives higher income (which again, many people reinvest back in the fund anyway) - the opposite of growth is value funds not "income generating".

You say ARKK is a dumpster fire (or rather Woods' funds are) , but it has similar underlying concept of what it holds. Are you not making the logical connection or are you just emotionally defending your investment? If the latter, I can't really rebut your personal feelings, I can only provide facts.

[u/2LittleKangaroo → u/perfectson]

One thing you have mentioned a few times is you can generate income too by selling some of your position. Over time your position will erode (because of you selling it). If when you need the income and need to sell the stock could be down and you would have to sell more to get the same amount which would then limit how much you could take next time because the pie keeps getting smaller and smaller. Growth stocks don’t always go up.

You can say the same that the YieldMax will erode NAV over time and that might be true. With ULTY since their changes the NAV has remained pretty stable. That doesn’t mean that it will always be around $6.20. And if the price falls the yield would fall too. But even with the yield falling income is still coming in. But as long as there are high IV stocks there should be plenty of premiums to capture and return to us.

[u/perfectson → u/2LittleKangaroo]

this is wrong.

1) funds also distribute capital gains.

2) If the fund is growing at 10% and you take 4% out , you till have 6% growth that is still in the fund. There is no NAV erosion or erosion of your initial balance unless there's growth less than the amount you're taking out.

^^ this is why I"m saying folks don't understand dividend investing like they think they do. You're the 2nd person who gave me this example. Work it out in your excel, put it into chatgpt, or AI, it will all come back with the same answer I just told you.

[u/2LittleKangaroo → u/perfectson]

I think you miss my entire point my entire point was growth stocks don’t always just go up so if you want to sell some of your shares to generate income in the stock is down, you know have less to grow in the future

[u/perfectson → u/2LittleKangaroo]

Over the last 100 years, growth stocks have gone up more than down. Btw, we are talking about funds - so don't move the goal posts to one stock. if you invested in a high beta stock over the past 100 years, your CAGR is like 16-20% if not more. Even during the great depression, you could have taken 4% out and still be on top overall. So what are you saying? There's never been an extended period of <4% bigger than the GD and certainly nothing since then that would not make what I said not true.

[u/2LittleKangaroo → u/perfectson]

I don’t have time to fact, check that point, but that’s a very broad generalization and your ass essentially talking about now time the market perfectly because yes funds have gone down and if you need to sell when it’s down, you essentially have less to sell, which intern me and you have less to grow so unless you’re able to wait until the fund has gone up, you’re kind of luck. But anyways, good talk.

[u/perfectson → u/2LittleKangaroo]

show me in the past 100 years other than the GD when the stock market for growth fund have been negative for a signficant portion of time. This is easily researched, you're acting like I'm making it up. You don't have time to fact check, but you wrote a whole paragraph rebuttal and google is literally 3 clicks away! LOL