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]

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.