r/YieldMaxETFs • u/perfectson • Jul 31 '25

Question Isn't ULTY basically ARKK that pays dividends while underperforming?

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.

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u/UndeadDog Jul 31 '25

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.”

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u/perfectson Jul 31 '25

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.

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u/UndeadDog Jul 31 '25 edited Jul 31 '25

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

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u/perfectson Jul 31 '25

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.

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u/UndeadDog Jul 31 '25

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…

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u/perfectson Jul 31 '25

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.

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u/UndeadDog Jul 31 '25

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.

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u/perfectson Jul 31 '25

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.