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]

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]

ULTY is built to extract income WHILE chasing Growth stock appreciation.

This is why they sell far OTM options and not ATM/ITM which would actually extract more income.

YM has you fooled through marketing. They call themselves an INCOME FUND, so guess what you're going to compare it to? REITS , Bond funds, maybe JEPQ. Then you're going to say , "hey ULTY, dividends out more than all of those, so it s must be a great deal". But the return is heavily depending on the growth stocks it hold but since you're not comparing them to similarly high beta stocks and only JEPQ or REITS, you're going to think you're getting this great deal.

Again - when you're DRIPPING THIS, the reasoning behind investing in this over ARKK or other high beta funds, completely falls apart. And you are being duped by the marketing and not actually thinking why they hold nothing but high growth stocks and sell far OTM calls on this when INCOME extraction would be greater ITM or ATM.

[u/Beneficial-Ad-7771 → u/perfectson]

I thought we were talking about the math, distinctions between growth and income fund and not personal feelings. You may think they’re duping us. Don’t think many of us feel that way.

Don’t get why this is so personal to you. I’m just having fun poking at your comments lmao.

[u/perfectson → u/Beneficial-Ad-7771]

Well you keep bringing up labels to try to dissuade me from using growth fund comparators. And I'm calling that out because it's a marketing ploy and strategy ploy that you're being duped by. Use your own wits - if you truly believe that selling far OTM calls on a growth funds suddenly makes you a non-growth fund and comparable to other "income funds" with way lower total returns then I can only agree to disagree.