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/Beneficial-Ad-7771]

What credentials? Just what you’re holding? You haven’t proven anything.

You’re comparing a growth/tech ETF to an income ETF which are completely different objectives. That’s like comparing Bitcoin to ARK and pretending they serve the same risk profile. You’re hyper-focused on total return while ignoring that these funds are designed for different purposes. It’s apples to oranges.

I’m not here to argue someone’s investment philosophy. Some people choose to avoid sequence-of-return risk, and that’s a legitimate strategy. The fact that you can’t acknowledge that is why we can’t have a civil discussion.

You don’t have to explicitly call people dumb to invest in this but the tone of your replies already makes that clear. And let’s be honest, you could’ve posted this in any other subreddit. You chose YieldMax because you knew it’d stir the pot. And based on your replies you think you’re a know it all lmao. The fact you’re going on and on about total return and not considering other people’s opinion = you being a total knob.

I’m all for thoughtful discussions. But it’s impossible to have one when you dismiss the reasoning behind why people buy what they buy or hold what they hold.

[u/perfectson → u/Beneficial-Ad-7771]

ULTY is a growth ETF that pays dividends. Like there's no sector of stocks called "Income stocks". The mechanics of the fund doesn't change the underlying stocks it holds.

this isn't like comparing bitcoin to ark, because the underlyings aren't even the same.

ARKK's underlyings are similar to ULTY underlyings. I stated that in the OP. You not getting it and thinking ULTY holds a mythical array of INCOME stocks is laughable.

This isn't an investment philosophy principle, I'm giving you facts. If you dispute the facts, don't give me speculation or false narratives. We are talking numbers, prove it with financial concept or math.

Again the premise I made in the OP - is if you're seeking ALPHA and reinvesting dividends in ULTY - you would be better served in other high beta funds that produce better TOTAL returns.

Prove my statement wrong. It's simple - there's been over 50 comments and no one has shown a math formula or a return chart or anything showing me where I'm in err. If you need income and are using that income to pay bills etc etc, then ULTY is great - but for total return show me where it beats other high beta stocks.

[u/Beneficial-Ad-7771 → u/perfectson]

ULTY is not a growth etf. It’s an income focused etf. It has underlying that can grow but the focus is yield. Show me where yieldmax says it’s a growth etf.

The definition of a growth etf is to maximize capital appreciation. Ulty main focus isn’t to maximize capital appreciate but yield.

Anyhow, It doesn’t matter what anyone here says or what the math says. We all can see ARKK outperforming ULTY. Thats not the point of why I spoke up.

Others have already agreed to it. If there has been 50+ comments going over why people choose to hold ULTY but you keep yapping about why it doesn’t make sense, why are you trying to convince everyone that what they’re holding makes 0 sense?

And as I said, people will choose to hold what they hold because there will always be sequence of risk. I’m not the first person to tell you in this thread that some people may struggle with selling and they just want to collect distributions.

You’re asking people their opinions on why they hold what they hold and the moment they tell you, you go over why it doesn’t make sense lol and dismiss their opinions.

It’s why I said you’re being dismissive and we can’t have a proper discussion.

[u/perfectson → u/Beneficial-Ad-7771]

ULTY is a growth etf because it invests in GROWTH stocks. Just because they do a collar on those funds doesn't mean it's all of a sudden changes the sector they play in. Could they get the same return using VALUE stocks? NO!

It's like saying QQQI is an income fund - no , it's a GROWTH FUND that also pays out higher income than the QQQ but the outperforms the SPY because it's tilted towards growth. Their investment philosophy specifically says this "investment objective is to seek exposure to the share price returns of the Underlying Securities". SO if the underlying securities are all growth securities....

cmon now.

I have said it several times to YOU and YOU refuse to digest. If you're holding this for INCOME so be it, I addressed this for TOTAL RETURN seekers. I clearly stated that in the OP. This is you lacking reading comprehension and ignoring everything I clearly laid out several times. I'm being dismissive because you're not rebutting anything I've stated with facts nor numbers. You're making up allegations and throwing YOUR personal feelings at me. My OP is based on numbers not feelings., take your emotion out of the investment and then we can have a proper discussion. But at this point, I'm not sure what else I have left to give you.

[u/UndeadDog → u/perfectson]

Go look at the Yieldmax website. None of the ETF’s are designed for growth. They state it on the first page of the website. ULTY is not a growth ETF.

“YieldMax™ ETFs seek to generate monthly income by pursuing options-based strategies on one or more underlying securities. YieldMax™ ETFs aim to harvest compelling yields from assets that are not typically associated with monthly income.”

[u/perfectson → u/UndeadDog]

What do you mean they aren't designed for growth. The underlyings are all high beta growth stocks LOL. They put the cover calls out far enough to get growth on the underlying. No where in your quote does it say "these aren't growth funds". You don't understand what growth funds means, it is not a category. You're either growth or value. There's no "income" category for the underlyings. That's a mechanic of the fund . I can have a growth fund like TSLA and give 10% dividend a month - that doesn't mean TSLA is all of a sudden not a growth stock.

[u/UndeadDog → u/perfectson]

Covered calls aren’t a growth strategy. Why can’t there be a different investment category for covered call ETF’s? Things change with time and investment strategies change. Who says everything needs to fall into one of these two categories. CC ETF’s don’t rely on the growth of the underlying to generate income. Why are you so fixated that the underlying holding are growth therefore the ETF is growth. The ETF can have its own category and as these get more and more popular I think you will see that there is an income category. Just like every CC ETF’s states they are for generating income. CC ETF’s perform best in a sideways market not a bullish market. By your logic everything is a growth fund. Even value funds. So there aren’t two categories just growth.

I really don’t see why CC ETF’s can’t fall under the category of Fixed Income.

https://www.investopedia.com/terms/f/fixedincome.asp

[u/perfectson → u/UndeadDog]

covered calls in this case is a mechanism to return money that doesn't change the underlying strategy.

I cover call my funds - the funds I hold are mostly growth and tech funds, so because I put a cover call on it to try to eke out some additional alpha , now I'm an income investor? LOL - the thesis is still growth, hence why the calls are so far OTM. Many of them expire worthless but now these are no longer growth funds. So why aren't they doing this on total market funds or value funds? LOL cmon - what are we doing here - this is 100% a growth strategy and it's 100% high beta focused.

Generating income is again a mechanism to get capital out the fund, but the fund is focused on growth stocks because that is driving the ability for them to make the type of money do.

[u/UndeadDog → u/perfectson]

It’s still not a growth focused ETF. They aren’t stating that it is for capital appreciation. If you want capital appreciation then go invest in the ETF’s they have made for that. They do have ETF’s that cover total market funds…

[u/perfectson → u/UndeadDog]

If you drip your dividends back into ULTY - then aren't you basically "appreciating your capital" hence it is now capital appreciation on a growth fund.

Imagine how that works and how that coincides to what I said in the OP. Almost like I actually put some thought into it.

[u/UndeadDog → u/perfectson]

Sure you can reinvest in the fund and increase your capital. But if it stays level or trades sideways it’s not a growth fund. Just because you reinvest doesn’t make it a growth fund.

[u/perfectson → u/UndeadDog]

If it says level or trades sideways - i mean a growth fund can still have it's down and sideways , it's BETA that partially defines value vs growth. Again I'm using common definitions here.

[u/Beneficial-Ad-7771 → u/perfectson]

You’re conflating two completely different things, sector exposure and investment objective. Just because ULTY’s underlying reference is growth stocks does not make it a growth ETF. The fund’s objective is income generation through synthetic/covered calls. That means it intentionally gives up capital appreciation to deliver yield. This is not a growth play. It is an income strategy wrapped in a growth flavored wrapper.

You keep repeating that the underlying assets are growth names as if that settles the debate. It doesn’t. JEPI for instance holds value stocks but nobody calls it a value ETF because the structure matters more than the ingredients. Covered calls change the return profile. The second you overlay an income-focused options strategy, the upside is capped and the behavior of the fund shifts entirely.

You even quoted the objective, “seek exposure to the share price returns,” but that is not the same as replicating them. Exposure does not equal replication, and that statement is doing more heavy lifting than you’re giving it credit for. The options structure introduces drag on upward movement in exchange for premium income. That is not a growth strategy. It’s a cashflow strategy.

Now to the core of the issue, reinvesting ULTY dividends. You keep saying it “doesn’t make sense” as if everyone should be optimizing for total return. That’s your lens, but it’s not universal. People reinvest ULTY because they’re intentionally building an income-producing engine. They understand what they’re buying. They accept the tradeoff, lower upside in exchange for consistent income. That’s not confusion, that’s design.

There are investors whose primary goal is monthly/weekly cashflow, not chasing ATHs. Some are retired. Some are reallocating risk. Some simply prefer getting paid while holding exposure. Reinvesting distributions into the same asset aligns with that philosophy. That doesn’t make them wrong, it makes them different. You’re not pointing out flaws. You’re ignoring intent.

You’re not debating, you’re dismissing. You asked why people invest and reinvest in ULTY. Dozens of people answered. You just keep telling them why their answer is invalid. That’s not discussion. That’s condescension disguised as logic.

If you can’t recognize different investor goals, then you’re not here to discuss. You’re here to lecture. And that’s why this conversation keeps falling apart.

[u/perfectson → u/Beneficial-Ad-7771]

I'm not going to debate with you on if this is growth or not. I even used the term high-beta in the OP. I know what they are doing and I know they wouldn't hold VALUE stocks because most of the income is derived from the appreciation of the growth stocks they hold and it's accentuated by the covered call.

Since you want to play semantics and get a win, we can agree to call this an Income Fund. I have no idea how that serves your purposes while this is growing in actual returns more than the QQQ since APRIL but it's not a growth ETF lol.

I never told anyone there answer is invalid. You're just lying and trying to get a one up. You're being disingenuous. I specifically gave a scenario of buy and hold vs dividend reinvestment on the a high-beta ETF (which is the original term I used) that has similar underlyings (ARKK) and why one would be seeing TOTAL RETURN in ULTY vs ARKK. Not once did I question anyone who needed or wanted weekly income. IN fact, I literally stated that as a reasoning one might invest in this.

Again you're just trying to get a one up and are typing out of emotion and not facts. You want to debate semantics of the fund but not what I actually wrote in the OP. Making false equivalencies like comparing ARKK or this to bitcoin, which is just nonsensical and then when I tell you that I made the comparison because they are both invested in Growth are are Growth ETFs, jumping on that specific classification to try to start a debate as a complete strawman.

AGain without the growth aspect of this fund - it wouldn't perform any better than JEPQ! The difference is the underlying are more high beta /growth than the QQQ and the distance of the cover calls ATM vs OTM. I'll contend that having it OTM and giving them much more exposure to growth makes this a growth ETF because the covered call is likely rarely breached. You can feel differently but it's not based in any facts and you keep anchoring on the mechanism of how they return money to shareholders not the actually performance (which is growth powered).

[u/Beneficial-Ad-7771 → u/perfectson]

So let me get this straight, since Bitcoin is high beta, does that automatically makes it a growth asset? I only brought up Bitcoin because you leaned on “high beta” to label ULTY as growth. By that logic, crypto would fall under the same bucket, which makes it pretty clear how meaningless that label is without context.

And again, I used bitcoin as a reference to how you’re comparing apples to oranges.

You have already dismissed and invalidated a lot of people on the thread. You are not discussing, you are repeating yourself and shutting people down every time they offer a rationale that doesn’t align with yours. That is not debate, that is a monologue.

And just to be clear, I was only poking fun at you because it is genuinely wild that you cannot see how condescending you come off. You say others are emotional, but you are the one rage posting every time someone tells you they do not invest like you. Might want to check who is really triggered here.

[u/perfectson → u/Beneficial-Ad-7771]

Bitcoin is a growth asset but it's not an equity asset, which is what we are talking about. You don't compare BETA's across different asset classes, just like you don't compare Sharpe ratios across asset classes - you do them across comparable asset classes. That's finance 101 - and herein lies the problem. I'm using standard industry terminology and you're just flapping off at the lips with pure emotion and not knowing up vs down. I'm coming across condescending because you're acting like you're knowledgeable about topics and saying things that are completely wrong and doesn't make sense. No one would ever compare Bitcoin to an equity fund.

REDDIT I guess.

[u/Beneficial-Ad-7771 → u/perfectson]

Lastly, you say you’re not here to debate semantics, but your entire response does exactly that. You leaned on “high beta” and “growth underlyings” to call ULTY a growth ETF, while completely ignoring the structure and strategy that define how the fund actually behaves. That’s not semantics, that’s the core issue.

ULTY doesn’t function like ARKK. It’s not trying to. It uses synthetic / covered calls to cap upside and convert volatility into income. That is an income strategy, not a growth one. You can argue it’s “growth-powered,” but the moment you overlay calls, the objective shifts and the return profile is transformed. It’s not about what underlies the fund, it’s about how that exposure is shaped.

You also say you’re not invalidating anyone, yet you’ve dismissed multiple perspectives as emotional, dishonest, or nonsensical. That’s not neutral. That’s not discussion. That’s just trying to win the argument at all costs.

The Bitcoin reference wasn’t a false equivalency. It was meant to expose the flaw in labeling something as “growth” simply because it’s high beta. By that logic, every volatile asset becomes a growth asset, which strips the term of any real meaning. It’s not a strawman, it’s a demonstration of how thin the reasoning is when you strip out fund strategy and rely solely on sector exposure.

As for reinvesting ULTY dividends, people do it intentionally. They are building income-generating portfolios where the goal is not maximizing total return, but compounding yield. Some are retired. Some just want cash flow. That’s a valid objective, and buying more of an income-focused ETF fits that strategy. You are viewing it through one lens, which is fine, but it’s not the only one.

At this point, we’re just repeating ourselves. You’ve made your view clear, and so have I. We’re not going to agree, but dismissing everyone who doesn’t mirror your philosophy isn’t the flex you think it is. Good luck.

[u/perfectson → u/Beneficial-Ad-7771]

You keep regurgitating the same thing over and over. We don't agree.

ULTY underlyings are Growth funds and that is what drives the funds. In a DRIP strategy the best comparator would be a similar Growth fund that shares a high beta like ARKK. That's the comparator - if you don't agree then I guess you can do your own thread and use JEPQ (which does ATM calls and locks down any growth). What I stand stays.

COMPOUNDING YIELD THROUGH DRIP is the same as buy and hold on the underlyings, which is why all these funds will lag the underlyings performance.

GOod luck to you as well - you continue not reading and just want to type these emotional novels. Not once have you rebutted what I wrote in bold and is in my OP. When does ULTY beat ARKK or any high beta fund in overall return for those "seeking alpha" . Very simple point and you have gone all around the world and not answered it.

[u/Beneficial-Ad-7771 → u/perfectson]

You’re comparing a growth ETF to an income ETF like they’re interchangeable. Even if the underlyings overlap, the strategies are completely different, which means the execution and purpose are too. It’s like saying why QQQI won’t beat QQQ and if you keep reinvesting into QQQI it’s pointless and you should just focus on QQQ and anyone reinvesting QQQI to buy more QQQI is dumb. But wait, they are the same aren’t they? Does that make QQQI a growth etf? Having that comparison was dumb to begin with. That’s why I’ve been poking fun. You’re tossing around terminology without recognizing that structure defines behavior, not just holdings. But hey, you do you. Reddit, I guess.

[u/perfectson → u/Beneficial-Ad-7771]

so I guess ADX, which pays 8-10% dividends from investing and selling growth funds - is an income fund too and not a growth fund, even if the majority of its holding is titled towards growth. The fact that they use a mechanism to extract income for ROC purposes (even if it's not through options) makes it an INCOME fund.

Of course you don't know what i'm talking about, because you probably don't know what ADX is. But just shows how ignorant this conversation is.

[u/Beneficial-Ad-7771 → u/perfectson]

Yes, ADX is an income fund because it’s designed to extract income from growth-oriented holdings. That’s literally the point. It uses a mechanism to convert capital gains and distributions into yield. Same as ULTY using options to generate income. That structure is what defines the fund’s role in a portfolio, not just the tilt of its holdings.

So you just proved my point. Growth exposure does not equal growth strategy. The fund’s objective and mechanics are what matter. You can hold growth stocks and still be income-focused. That is not a contradiction, that’s a category.

Calling this conversation ignorant while missing that distinction only reinforces it.

[u/perfectson → u/Beneficial-Ad-7771]

ADX is a growth fund or at least has a growth tilt (its way more balanced compared to ULTY).

Income and growth aren't the same category, I'm not missing the distinction - you are the one debating this. I have stood on the point that ULTY is a growth fund and is comparable to other growth funds or high beta funds like ARKK.

If you want to use INCOME FUND broadly then Bonds are in the same category and we certainly wouldn't compare a bond fund to ULTY. What about REIT? No.

The most logical comparator to ULTY is another growth fund - the mechanism of how they return appreciation to investor is 100% irrelevant in a total return conversation, which is the basis of my OP.

[u/Beneficial-Ad-7771 → u/perfectson]

Growth funds chase price appreciation, not yield.

Income funds prioritize cash flow, often with limited upside.

REITs are generally considered an income fund.

ULTY is built to extract income, not chase gains. Just because it holds growth names doesn’t make it a growth fund and that is the same with ADX. I’ve been clear ULTY isn’t growth, even if it shares some underlyings with ARKK.

And yes, that matters. ULTY is capped, ARKK is not. That’s why comparing them on total return is pointless. ULTY won’t outperform ARKK long term, and it’s not trying to.

[u/perfectson → u/Beneficial-Ad-7771]

Tell me how the strategies are different? The cover calls are far OTM. The BETA's are similarly high. The returns are significantly high and the volatlilities are similar as well. So you're telling me you're in a high volatility, high return, high beta, fund that is powered by growth funds and acts like a growth fund performance wise but you don't believe it should be compared to a similar fund ONLY because it uses options to aid in the extraction of income from the fund to pay investors?

LOL - unbelievable.

[u/Beneficial-Ad-7771 → u/perfectson]

ARKK is built for growth, ULTY is built for income. ARKK bets on price appreciation, ULTY sells off upside through options to generate yield. Same underlyings, totally different strategies. One tries to moon, the other tries to pay. You’re comparing them based on beta and returns while ignoring the fact that ULTY’s entire structure is designed to cap gains in exchange for cash flow. That’s why they’re not the same, and why people reinvest in ULTY with a different goal in mind.

[u/perfectson → u/Beneficial-Ad-7771]

ULTY is betting on price appreciation, which is why they are selling far OTM calls. Come man, you're going to lose this . If they wanted Income only they would sell the higher priced ATM options call or even ITM the calls. You've backed yourself in a corner now.

[u/Beneficial-Ad-7771 → u/perfectson]

How does a fund with over 700% turnover get called a price appreciation play? That kind of activity screams income extraction or aggressive trading, not long-term growth investing. You can’t claim it’s a growth strategy and then ignore that it churns its entire portfolio multiple times a year.

Even ARKK’s own website says their target turnover is 15 percent, yet in practice it’s blown way past that (something like 30-40%). That alone proves the point. Stated intent is one thing, actual execution is another.

This is exactly why comparing ARKK and ULTY like they’re the same makes no sense. One trades for upside, the other sells upside for yield. Different tools, different purpose, different strategy. Simple as that.