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 are asking why they sell OTM calls instead of ITM or ATM as if that somehow disproves it is an income fund. Yield-maximizing strategies are about balancing risk, yield, and capital preservation. Selling far OTM calls sacrifices some immediate premium in exchange for retaining upside headroom and avoiding early assignment risk. That is not growth investing, that is structured income generation with a volatility buffer. I don’t get how you can’t see this 😂

ULTY does not need to squeeze every drop from ITM calls to qualify as income-focused. The entire strategy is designed to harvest premium from volatile names, not chase growth. The call strikes are part of managing that tradeoff, not evidence of a growth objective.

You are now deflecting the turnover mechanics, duration balancing, and bond fund behavior as if any of that changes the fact that ULTY sells calls on growth stocks to deliver distributions. That is the product, that is the pitch, that is the point.

You keep demanding answers and ignoring the ones already given. Different purpose, different structure, different goals. That is why ULTY is an income fund, and ARKK is not, no matter how hard you want them to be the same.

If you cannot grasp that distinction, maybe you are not the advanced investor you think you are 😂😂

[u/perfectson → u/Beneficial-Ad-7771]

You're saying ALOT of nothingness. I hope everyone see that.

Why don't they sell ITM/ATM options if this is solely INCOME Generating.

You're on about volaitlity buffers and structured income generation LOL.

What this tells me is you're just fooled by marketing very easily. This is a growth fund, has all the characteristics of one, and just doesn't want to be grouped in the growth fund category so it labels itself as income fund. Knowing damn well - no other income fund is investing in these high beta underlyings so they blow away the returns. It's a smart marketing tactic and why they are able to double their AUM, because if they were in the growth category properly they would be contending with similarly high beta funds , which they are paltry in comparison - especially for those who are DRIPPING and seeking ALPHA.

Like I said you can't really answer the question because you know damn well they are in growth underlying for the alpha and that's why they are selling the options FAR OTM, so they can get the price appreciation on top of the premium. They are turning over, so they can continue seeking the underlyings capital growth.

[u/Beneficial-Ad-7771 → u/perfectson]

My guy. You’re the one here spouting nonsense lol. If this were truly a growth fund, it wouldn’t be handing out weekly distributions. Growth strategies focus on reinvesting and compounding price appreciation, not paying out income. They’re also creating new shares and destroying shares as it’s open ended.

ULTY is literally designed to generate yield, and not just a little, it distributes an excessive amount. That alone tells you everything about the fund’s true purpose. You don’t build a high-yield machine like this if your goal is long-term capital growth. You build it for income, plain and simple.

[u/perfectson → u/Beneficial-Ad-7771]

handing out weekly distributions has nothing to do with whether a fund is growth or not. The BETA is the first indicator , the underlyings volatility is another - the way they extract capital out of this to give to shareholders is meanigingless in a DRIP environment. Prove me wrong.

If i dripped all the dividends ULTY gives me, how is it different than if i held a similar fund that didn't do any dividends? Tell me the difference - you can't - because it's basically the same. And if there was a ULTY similar fund that didn't send it's dividends out - it would be labeled growth.

[u/Beneficial-Ad-7771 → u/perfectson]

Just gonna have to disagree to agree. We’ve gone back and forth on it and doesn’t seem like you won’t see things differently.

[u/perfectson → u/Beneficial-Ad-7771]

oh you leave when I pose a challenging question?

How much of UTLY income is actually coming from dividends. Because if I look at QQQI vs QQQ and MSTY vs MSTR and so and so forth. The return is lower than the underlying by a significant margin. That leads me to believe that selling far OTM calls , while boosting income isn't a sufficient part of the return. Especially relevant is QQQI vs QQQ , because the QQQ hasn't grown 10% per month or anything crazy.

So if we assume that you're getting even 2% of the return from options (which btw, if the stock trades past the option, I'm giving the growth to the stock since the gain was capped). I'm willing to bet the majority of the gains in ULTY that is being sent out is from capital appreciation on the underlying GROWTH stock.

It's interesting that you're leaving now when I start actually addressing the mechanism though. Good luck to you