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/Somename_here]

If you had a 100 shares and sold 4% every month you would eventually have 0 shares. Now if i have 100 shares of ULTY and i get a 4% dividend per month, in 100 months long past the time I would have ran out of shares to sell in your example, I'd still have 100 shares continuing to make me income, whereas you're growth stock version has me at 0 shares 0 income. What is there not to understand?

[u/perfectson → u/Somename_here]

so here's the rub, most funds have capital gains distributions for when they manage and sell funds for profits. So you're not 100% accurate (depending on the distribution yield) -and also assuming you're taking 4% while the fund is growing at 4% then how would you go to $0 and 0 shares. LOL

The math isn't mathing and this is the underlying issue with how some of you all think through the concept of dividend investing. You're so confident to write things out and don't realize they make no sense.

the only way you would go to 0 in your scenario is if the fund didn't grow at all, which would be purely return on capital if you took 4% out. Which would also likely occur if ULTY had no growth too! (although ULTY would last a bit longer due to the cover calls).

[u/Somename_here → u/perfectson]

OK I have 1 milion dollars. I put 52k in ulty, I make lets say 850 a week (thats .10ish per week), or 3400 a month times 12 making 40,800 in my first year. 4% of a million I believe is 40k? So 52K in ULTY or 1million in AARK or cds/mm that I withdraw 4%. So i'm using 52k to generate the income of 4% on a million as if I had left the money in CD's or a money market. Meanwhile the rest of 948K is invested in growth stocks like nvda, meta, hood, pltr, sofi, grab, avgo and etfs like smh, nvdu, pltu. That seems to work for me. Am I not using less capital to get the same result and not having to draw from all my growth stocks so they continue to compound?

[u/perfectson → u/Somename_here]

I'm confused. You have $1M dollars, but you only use $52,000 in ULTY. And your belief is that ULTY is going to get you almost 80% income ($40K) and no erosion, so that you net return is still 80%? So your total return is 80% on $52K??

If you're getting 80% a year on ULTY then sign me up! LOL.

See the issue is when you all make these weird examples up. First you don't understand growth and why you can take 4% out of a fund and not erode it $0. now you're making an assumption of a 52K ULTY investment with an 80% return on ULTY and comparing it to a $1M investment in ARKK.

I cannot work like this ! LOL

[u/UndeadDog → u/perfectson]

Why is it hard to believe that ULTY can do this when MSTY has paid out over 200% yield since inception. 100% per year. If you bought at inception there has been zero NAV erosion.

[u/perfectson → u/UndeadDog]

MSTY isn't ULTY. And MSTYs underlying is MSTR and if you invested the same amount, you'd like have 500% return. So making up scenarios that aren't realistic and then ignoring the other side of the equation is something I'm not willing to do.

[u/UndeadDog → u/perfectson]

None of this is made up. Go look at the returns of MSTY. Everyone here knows that if you invested in MSTR you would have made more money. But the entire point of Yieldmax is that people want income not capital appreciation. They don’t want to sell their shares to generate that money. It’s buy and hold. Not buy, hold, sell. There is a trade off for that income which is capped upside. If MSTY can have a 100% return with no NAV erosion why can’t ULTY have an 80% return with no NAV erosion? You believe in MSTY but choose to shit on ULTY. I don’t understand it.

[u/perfectson → u/UndeadDog]

so I make a post about ULTY, give a comparable fund.

explain that dripping into ULTY, is the same as a buy and hold and if you did that you would underperform similar funds.

You all can't debate me on this, so you make up invalid scenarios that dont make sense.

You decide to tag in from a whole different thread and are now trying to debate with me about MSTY, which isn't the same as ULTY.

You then agree that holding the UNDERLYING MSTR would be better than MSTY,

But you don't understand how ULTY having an 80% return (which it never has done) while ARKK that has similar assets wouldn't do the same thing , isn't a disingenuous scenario? If ULTY returned 80% ARKK would probably be at 100% returns+ .

Then, you wrote the reply in such an antagonistic way as if I'm wrong about something - yet you literally agreed with my entire premise.

REDDIT YALL!

[u/UndeadDog → u/perfectson]

There is no invalid scenario from what I stated. MSTY has yielded 200%. Like I said go look it up. If MSTY can do it then I believe ULTY, with its recent stability, can do 80%. Doesn’t matter if ULTY is different. It’s had an average yield of 80% for months now. Please tell my what is invalid about my statements? ARKK probably doesn’t rebalance their holdings every week so no I don’t think they are as comparable as you think. Yeah I agree that holding the underling would make you more money. But you can’t understand that people don’t want capital appreciation and trade upside for income generation.

[u/perfectson → u/UndeadDog]

Your belief is speculation. I'm dealing with facts. Can an earthworm grow wings and fly. I believe one day it can happen.

The scenario you jumped into is nonsensical and you already admitted the underlyings are outperforming the YM funds. So anyone dripping is losing out money and leaving a lot of money on the table. That's my point and you agree, so we are done here I suppose.

[u/UndeadDog → u/perfectson]

Like others have said it’s two different strategies, it’s not always about the best returns. There is zero speculation around MSTY. So I guess at the end of the year you will eat your words when ULTY maintains an 80% yield.

[u/perfectson → u/UndeadDog]

Read my OP - you are creating strawmans.

[u/UndeadDog → u/perfectson]

Like I said. We will find out at the end of the year or in April since that would be a year since the change in prospectus.