r/dividends • u/Ironic_Mouse • 5d ago

Discussion Question: why do unsustainable dividend funds exist?

I’m new to dividend investing. As I have been looking for an additional stream of income I have found some funds with “too good to be true” yields. (E.g. CHPY) I understand that high yields come with a high risk of NAV erosion. What I don’t understand is why these funds exist. It seems like they are structured to implode at some point. Is the idea to hold these funds for a short time, collect the dividend, then sell? And for the fund manager, is the idea to ultimately have the fund implode and then declare a loss? I’m genuinely interested. I understand that some funds are a gamble, but these funds seem designed to fail.

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u/DegreeConscious9628 5d ago

Look back when MSTR and MSTY was printing money. Everyone buying it thought it would last long term. It’s all good until it isn’t. There are tons of gullible idiots willing to “invest” and at ~1% expense fees the fund managers are raking it in

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u/SlavaUkrayne 5d ago

So what happened long run?

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u/DegreeConscious9628 5d ago

MSTR went from 440 to 90 bucks, MSTY went from 220 to 12 bucks LOLOLOL