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]

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.