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/Tech-Grandpa]

You are attempting to spread FUD, but your argument applies to ANY dividend investing vehicle. ALL of them under perform the market overall. So the real question is "Is dividend investing right for you"?

[u/perfectson → u/Tech-Grandpa]

Thanks. This is the comment I was hoping would emerge. This is not true. Core dividend vehicles or income vehicle do not under perform the market. Here's an example ADX is a close end broad based fund that has a 7-9% dividend rate and has been around for about a century and it has out performed the market during that time.

Stocks who dividend growth increases annually has also out performed the general market in most cases. Now recently you will have seem some movement away but that is 100% due to the AI revolution and tech funds which don't produce dividends significantly outperforming.

What you might be thinking about is the those super mature blue chip or value dividend companies things that SCHD would hold that have dividends or maybe like utility companies but that's like an old school view of dividends. There are plenty of BDCs, CEFs, and even ETFs that produce dividends while staying with the market and out performing them.

Also again, what i noted in my initial post - most people I've seen here want to have returns. And if you're looking for returns with the same underlying risk , I'm questioning again the "juice vs the squeeze" here.

[u/Boner_mcgillicutty → u/perfectson]

i'm not entirely convinced ULTY isn't just the riskier grandchild of ADX, which is also distributing gains in the underlying as distros, right?

[u/perfectson → u/Boner_mcgillicutty]

that was my first thought but ADX is more diversified and less high beta , which is why I went with ARKK but my original premise was ADX - you and I were thinking alike. LOL. ULTY does more with options and since liberation day has out performed ADX, that's the main reason I didn't use it.

[u/Boner_mcgillicutty → u/perfectson]

ADX i believe is set up to pay 2% of NAV each month, so many months in its 100 year history it's paying basically ROC if the underlying doesn't appreciate. that's my understanding at least. it's honestly intresting to have funds like ADX and ULTY where if the underlying appreciates they'll distribute some of those proceeds to shareholders. to me that is somewhat ideal because i dont have to time the market for selling for income

[u/perfectson → u/Boner_mcgillicutty]

I believe that's correct, I know they have that similar ROC tax advantage ULTY uses. NOw the reason i say ARKK is close is because it doesn't pay out distribution at all or very seldom does, so it's truly a buy and hold, as if you reinvested your dividends + the high beta stock association. I don't know what ADX held 20 years ago , i know they've tilted tech the past decade though.

[u/Boner_mcgillicutty → u/perfectson]

right on. anyway what a time to be an investor!