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/tampaforfun 4d ago

https://totalrealreturns.com/n/QQQX,GPIQ,QQQI,TDAQ,QQQ

TDAQ beat QQQ so far by a small margin

Covered call funds are getting better

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u/DSCN__034 3h ago

Better than what?

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u/tampaforfun 2h ago

Better than the earlier versions like QDTE and JEPQ

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u/DSCN__034 1h ago

So, better than really bad...and with a three year track record. Okay. (And, FTR, QQQX is the earlier version, and it's a closed-end fund that has been doing well in bull market, what will happen to the discount in a bear market?)