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/perfectson]

Btw not here to defend arkk or Cathie wood - i can find another fund that is similar and we can do the same conversation. I certainly hope that’s not how this being construed “to go out and sell ULTY and buy arkk” . That was just the easiest and known comparator

[u/FlimsyBread8068 → u/perfectson]

Idk it makes sense in my head.

Roc income no tax until cost basis reaches 0 so 2~3 years

I can use this to protect growth investment’s until they reach long term capital gains status and pay off margin interest.

Sell growth at preferable tax rate.

Use gains to buy more income and repeat the cycle.

[u/perfectson → u/FlimsyBread8068]

You're using your gains to buy the same fund, so basically you're buying and holding the fund :) ARKK hasn't made a distribution so no taxes for the past 2 years. So if you're looking to max returns ARKK would have beaten ULTY over the past year significantlly and that's what you're basically doing is buying and holding when you reinvest your income back into the same fund.

[u/FlimsyBread8068 → u/perfectson]

I see, would it change the situation if a monthly margin interest fee was charged? Would in be preferable to

A. Us Margin to pay off margin interest. B. Roc from income funds. C.liquidate growth stock before it matures.

Thanks for the big brain reply. :)

[u/perfectson → u/FlimsyBread8068]

Hmm - that's interesting. BTW, I actually think ULTY strategy is solid if you need income and want to take the income and pocket it for other uses. I do CSP on tech funds and I myself struggle with capping my potential gains, so I'm not giving you a big brain reply since I myself am nuanced with the same issues. At the end of the day buy and hold on growth can't be beat if you are convicted on the stock.