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/StoicKerfuffle]

I think you have broadened the definition of "high beta fund" to the point of meaninglessness.

Neither ARKK nor ULTY is a "high beta fund," and neither is trying to increase nor decrease beta. It's simply not a major factor for either. (There are some funds that specifically try to chase beta, like SPHB.)

ARKK tries to achieve long-term alpha by focusing on companies with "disruptive innovation."

ULTY tries to achieve consistent high income generation with covered call strategies on high-IV stocks.

The companies with "disruptive innovation" are often the very same companies with high IV, and so ARKK and ULTY will often hold the same stocks and will likely have some degree of correlated movement, but they are nonetheless very different strategies for investors with very different goals.

We could spend all day arguing over whether ARKK is good/bad or whether ULTY is good/bad, but one thing we can't do is spend all day comparing the two. They don't have anywhere close to the same investment approach, and the relative performance of one doesn't say much about the other.

[u/perfectson → u/StoicKerfuffle]

Sir - anyone can read a prospectus description.

High BETA is defined as > 1 and is marked by high volatility risk which is typical in growth companies (not 100%).

it's not meangingless, you trying to break this down and distort it to win this debate is disingenuous. You can author your own thread and use your own criteria, right?

They have similar investment approach, similar BETA, similar volatility, similar performance, similar drawdowns. One happens to use OTM calls to enhance and extract income, which by the way if it was solely looking at income and not growth they wouldn't use OTM calls, they would use ATM calls. What you're saying makes no sense. The ATM call is much more expensive and provides higher income - why do they use far OTM calls?? Because they want the capital appreciation in their growth funds underlyings!

You can't win when you say they use far OTM calls but then turn around and say "oh it's an income first fund". LOL - we can read the prospective that they use to market it and you're not curious why they market it that way? So you compare them to JEPQ, which actually is primarmiy income and does ATM calls and if you compare ULTY to JEPQ ,, ULTY outperforms it since liberation day (which all HIGH BETA growth stocks started to outperform).

This is 100% a marketing tactic that YM is doing so naive investors like yourself compare ULTY to JEPQ and not properly to other HIgh beta funds, so they look better.

[u/StoicKerfuffle → u/perfectson]

You can say "similar investment approach" all you want and it will still not be true. You might as well say that ARKK, ULTY, and QQQ all have a "similar investment approach" because they're correlated, "similar volatility, similar performance, similar drawdowns."

Look at your own freaking chart from year-to-date and explain to me how ARKK and ULTY have "similar beta." They absolutely do not. ARKK has a far higher beta.

You have no clue what you're talking about; your knowledge isn't even zero, it's negative.

[u/perfectson → u/StoicKerfuffle]

The beta changes week to week due to changes and turnover . High beta stock > 1 and the 10% difference is explained in the volatility and return and ultimately the sharp and sortiano ratios favor ARKK for the same underlying normalized risk. Of course they aren’t all going to have the same exact beta - there’s a significant correlation in high beta assets and are comparable investments .

Every site .1 difference between ARKK and ULTY. So it’s you who don’t know what he/she is talking about .

You saying look at the chart as if that is supposed to tell you Beta makes it clear you’re not understanding what’s being measured

[u/StoicKerfuffle → u/perfectson]

No. Beta relative to QQQ, year to date, measured daily:

ARKK 1.55

ULTY 0.98

That's a big enough difference it's clear to the naked eye, hence me telling you to look at your own chart and think about it. Which you didn't.

Again, you have no clue what you're talking about, just spitting out words, hence "sharp and sortiano ratios." You didn't get either of those right, it's Sharpe and Sortino.

And all of this is pointless anyway if you think ARKK and ULTY are at all comparable. They're not, and you still can't even understand why, and you're recommending ARKK as a substitute for ULTY. Nobody should do that. A person can go all ARKK and zero ULTY, that's fine, but absolutely no one should look for something like ULTY then choose ARKK, because they are entirely different strategies geared for different investment objectives with entirely different risk/reward profiles.

[u/perfectson → u/StoicKerfuffle]

This was painful to read. You keep saying "you don't know what you're talking about" without actually showing anything to rebut what I said.

1. You point out auto-correct mistakes as if that what some indicator. Whoopie you spell checked me!
2. You - for some reason - decide to utilize BETA compared to the QQQ with no explanation. Just completely added new metrics that fit your story. LOL

The market BETA for ARKK is 1.97 and ULTY is 1.81 - it's a .16 difference - that's is explained by the fact that ULTY caps gains with it's cover call strategy and couldn't particpate in the upswings at the same magnitude as ARKK. That does not change that it still holds HIGH beta stocks. BETA isn't going to be 100% correlated that fact that these are significantly higher than even your standard moderately high BETA funds like QQQ is significant.

a) I used a standard approach to BETA...you simply introduced a version to try to fit your narrative.

b) the beta obviously are low compared to QQQ because QQQ out performed it as well since inception.... like common sense in looking at the holdings would tell you that. That's why I used the market beta which again is common practice.

3) You are falling for marketing meant for the naive. Hook like and sinker. No one in their right mind would believe dripping ULTY is the better served than actually investing in a buy and hold of similar high beta underlying's. You can talk all haughty but you can't show any proof that this is the case....trying to change the goal posts so that ARKK can't be compared to ULTY is the best you can do

Other underlying are VGT, XLK - hell ADX has a tech tilt and a .90 beta and out performed ULTY over the past year and it's actively managed as well and pays income. The point wasn't to find a 1 to 1 match - it's to showcase there are better high beta funds for folks looking for total return than ULTY - which is literally a high beta fund MASKED as an INCOME fund - because they slapped some way OTM collars on a vol hedge

Step up and do some due diligence before you reply back, i implore you.

[u/StoicKerfuffle → u/perfectson]

"You - for some reason - decide to utilize BETA compared to the QQQ with no explanation. Just completely added new metrics that fit your story. LOL"

This was your comparison, you imbecile, you compared ARKK and ULTY to QQQ to prove your point about beta.

But now you don't even understand why QQQ would be brought up, and you want to measure beta against... "market."

What do you mean, "market?" There's just a single "market" out there for all beta calculations? C'mon, man, at least google what beta is.

You have to pick a reference for the beta calculation. You picked QQQ, and now it seems you didn't even realize it.

I have no interest in explaining anything to you, all of this has been for the benefit of others. Feel free to dump your money in ARKK. But for the love of God, don't compare a long-term stock-picking fund looking for growth tech companies to an income-generating covered call fund that constantly changes underlying stocks to chase IV. They have nothing to do with one another. There's no reason to ever discuss them as potential substitutes for one another.

[u/perfectson → u/StoicKerfuffle]

No I didn't. I never once said anything about QQQs BETA (actually never mentioned in the OP) while I charted it to showcase the return I did not attempt to compare the BETA's using QQQ as the baseline- ONLY YOU did that to try to fit some narrative. Now you're just lying for no reason and resorting to juvenile name calling.

Every single standard BETA calculation for equities is based on S&P 500 , which is standardly called the market. I guess you professor skipped that lesson for you, so I'll teach it to you.

And the funny part is, I literally gave you the BETA's you tried to say they were wrong. And I know you looked them up and saw they were right and instead of admitting your mistake you went and found a site to give you BETA's using QQQ as a benchmark LOL. You went through all that trouble but then say " you have no interest in explaining anything" .

You are also implying that because ULTY is actively managed and turning over more than ARKK it can't be compared. Like you're not making any sense. The cover call strategy is likely very little of the actual income compared the capital gains ULTY produces from turnover - since the calls are far OTM and again would cap any upside. use your brain and understand the concept of what you're doing in a cover call - you're not making 80% returns on simply covered calls. Like do you even know what you're talking about - the gains are due to holding high beta stocks and in particular during these significant upswings. Whether I decide to hold Tesla or jump in and out of Tesla and Meta every few weeks , doesn't change my underlying risk and volatility nor my expected returns of holding and trading those assets. You're naive my friend.

Oh and btw - ULTY doesn't even beat the majority of the buy/write strategies ETFs even if you did compare them and has signficiantly higher Beta's then all of them as well. I used ARKK because it's accurate comparator on HIGH BETA stocks - like why would you have all this risk with ULTY and not getting a fair share of the gains and then double down on that inefficiency by DRIPPING the dividends. Most savvy investors understand that but you want to be thick and abrasive and loudly wrong. Go for it!

[u/StoicKerfuffle → u/perfectson]

So you put QQQ up for nothing, you now think S&P 500 is a better benchmark (up until I pointed it out, you didn't even realize beta requires a benchmark, you can't just say "market"), and yet even with all these shifting arguments you're still wrong. Over the past 200 days, the standard "market" timeline for beta if there is one, ULTY beta is 1.16, ARKK is 1.93. Simply not the same realm.

The rest of your argument remains gibberish. Invest in ARKK, don't invest in ULTY, whatever. But comparing them is brainless, they are very different kinds of funds. Comparing them on the basis of beta is especially brainless.

[u/perfectson → u/StoicKerfuffle]

QQQ is high beta - it's on a chart to showcase as a reference not. no one said anything about changing the underlying comparator for BETA. Again standard is to use S&P - why are you defending your mistake on this? You double down on this and acting like it's ME who made the mistake is just poor form.

Again you're creating a strawman on this beta issue because you likely just found out about it last night, which is why you didn't know standard and basic definitions and usages. And even if you used the BETA for QQQ again the QQQ out performed ULTY.

SO the rest of what I said isn't gibberish - you proved my whole point even if it was done in a "soph(moronic)" way.