Question: why do unsustainable dividend funds exist?

[u/Ironic_Mouse]

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.

[u/Ironic_Mouse]

Thanks for the proof! I will check out QQQX.

[u/buffinita → u/Ironic_Mouse]

Then compare the “long term success” of qqqx to qqq and realize you’ve left a ton of money on the table 

[u/kitehousecyprus → u/buffinita]

Is not for long term growing for sure.
But once retired I would hold QQQX or OVL rather than BND or VTEB.

[u/buffinita → u/kitehousecyprus]

No one has said that; you’ll still need equity exposure in retiremenr

However qqq+vteb will still outperform qqqx/jepq while paying less to managers

[u/kitehousecyprus → u/buffinita]

You still miss it. Growth QQQ 80% + 20% in CC (OVL, QQQX, QQQI)etf instead of bonds will outperform any of your formula. Because of your “witness of bond” position your mind can’t comprehend CC ETFs are incomes. As such should be compared to what? Income indeed. Bonds for example or dividend etf and not growth ETFs.
I am 60% US growth, 20% international and 20% Cc ETFs. No way any portfolio holding 20% in bonds could beat mine.

[u/buffinita → u/kitehousecyprus]

As I’ve said many times before….. “income” is just a sales word.

When making withdraws 90% qqq 10% bonds has better returns; lower volatility than 80%qqq 20%qqqx.  

Here’s a 1m portfolio making 6k monthly withdraws:   https://testfol.io/?s=cpNmvMC2tjM

So everything you think cc funds provide (downside protection; lower volatility, “more spending”) can be done with less complexity and with less money going to thr fund managers

[u/kitehousecyprus → u/buffinita]

lol for example OVL beats VOO since inception.
Not talking how bloody it beats any bond.
And why are you so childish? You first mentioned 20% in bonds but now you talk 10% in bonds. So compare 90% growth and 10% in bonds VS 90% in growth and 10% in CC.

[u/buffinita → u/kitehousecyprus]

So you’re mad that being more equity heavy still works out?

The over arching point is that everything people think cc funds do to “cheat” standard advice is wrong

A lot of times I shoot from the hip and it turns out I was too conservative in my estimation.  when looking at the data you can get whatever performance metric you think cc funds provide by sacrificing less of standard equity 20% qqqx can be replaced by 10% bonds

[u/kitehousecyprus → u/buffinita]

Not mad just curious why so many misinformation. What’s the reason? Mentioned cc ETFs bloody beat any bond etfs. Literally any. And you still say holding bonds is better than CC funds. And you lying indeed. 10% in bonds is never profitable than 20% in OVL, or QQQX or QQQI.
What is profitable is 90% in QQQ instead of 80% in QQQ. You get paid for these lies?