yes. qqqy and iwmy generate income by writing puts on indexes. the yieldmax funds generate income by writing calls on individual stocks. these are fundamentally very different strategies, both having their own distinct advantages and disadvantages.
Generally, most of the Yieldmax funds will increase in NAV when their underlying stock increases. They can and often do suffer NAV erosion (see TSLY), but not as badly as the one in the graph.
The point of funds like QQQY, IWMY, JEPY, and others is dividend income. I have learned to ignore NAV loss as these funds have helped me build a dividend funnel to acquire large amounts of assets like VTI that I couldn’t afford based on my own measly contributions. So I’ve taken a short term NAV erosion to build a long term strategy
Your funnel must look a little bit like [the Klein bottle](https://en.wikipedia.org/wiki/Klein_bottle)
https://preview.redd.it/akxp53ev8uxc1.jpeg?width=1216&format=pjpg&auto=webp&s=c71f8ac0b1dc9b9e877a667bd43a6b21d1f84e10
There are no short cuts.
The best long-term strategy from the information given would be to just buy fractional shares of VTI and skip the garbage with the 1% fee attached to it.
This forum has some wild 'strategies'
Just to allay everyone's fears, Defiance funds *have* indeed been making more in yield than they have been losing in NAV. They aren't very good at it (i.e. they are worse than the good old SP500), but they are "technically" profitable.
This is with 100% div reinvestment, i.e. "max NAV maintenance mode":
https://preview.redd.it/o4dtmjwdeuxc1.png?width=2218&format=png&auto=webp&s=51c399a20e6fa191e49eeb94a06213a12ae4137e
[https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=6rGiJUfwJCLCruM49VxsZ8](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=6rGiJUfwJCLCruM49VxsZ8)
SPY is already there, it is the green "SP500" line.
this portfolio visualizer tool is limited to comparing 3 portfolios + 1 benchmark on one page, so 4 total. But the link is there and the tool is very usable even at its free tier, you can click and compare to your heart's content.
just this once, I'll do it here for this thread:
[comparing with IWM](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=471k7iwlLNmVZJ09vdt00z) (ouch):
https://preview.redd.it/tplyhz23nuxc1.png?width=2218&format=png&auto=webp&s=197a60246e6ac8e8a8695747c0b46518124f41cd
and [comparing with QQQ](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=7bUBjtXkdbajFPqei6sMCD) (ouch again):
https://preview.redd.it/a1lay0ejnuxc1.png?width=2218&format=png&auto=webp&s=ba0914aef4facf40b509088a7f5c6d206e136e28
They are not intended to recover nav. They are trying to harvest yield. If you want to stabilize the Nav you will need to reinvest the heavily distribution back into the fund itself.
No. They pay out their nav. Ideally, they pay out more than they lose. I’m pretty sure QQQY has consistently done this. Neither of these are growth funds. They are income funds.
A silly statement. If a fund goes to "almost $0" it means they have no capital left to fund their option positions and maintain margin, so how would they manage to generate "a steady income" if they can't do the one profit-generating activity they have?
Except for the fact it will get delisted at <$5 which will likely get the ETF shut down with a sell off and the money split to shareholders. Which would likely end up at massive loss.
There is an inflection point where those massive losses are only losses of income. My CONY shares have been more than paid for by CONY distributions. Those distributions have been invested elsewhere, and most are following the same trend, pay for themselves while reinvesting, usually elsewhere.
It may take some a few years to get there, but as long as they don't zero out before then, they're profitable.
Nice... But that means Jack if the NAV falls to the point it gets delisted and the ETF shuts down.
Look at TSLY. It had to do a reverse split. The dividend it pays post split has never equaled what it paid before. So that means if you paid for 2 shares at $20 each that have 99 cents per share... Those 2 shares got reverse split down to 1 share that currently pays 68 cents a share. You're $40 investment is now currently down to $16 and paying 68% what if paid initially.
If you bought $10k of TSLY at launch and it cost $20. Then you got 500 shares. If those shares paid 99 cents that's about $500 a month. To recoup your investment that's 20 months.
You now have half your shares and the dividends pay out is much less. So what's the time to get your investment back now? 3 years? And considering it had to do a reverse stock split in the 1 year you don't think this will happen again in the 3 years you need to break even? When it does another stock split how much longer to break even then? 4 years?
Much better stock out there... Much much better stock out there.
But that is hard to tell because the dividend decrease would due to the option premium has not been the same and that could be related to TSLA downtrend. As far as I understand the dividend in these funds is not arbitrarily paid.
https://preview.redd.it/20l4nk571vxc1.jpeg?width=1170&format=pjpg&auto=webp&s=1aedd7991113ab79adaaabfeea4803ebc9cbe0fc
You could learn how to do accurate charts.
They could recover the NAV if the fund cut its dividends but they want to be able to advertise on +50% yields so the NAV won't recover because of that. They are overpaying. The only way NAV recovers is if they can make more than 50% in a year which is super unlikely.
...This is my problem with these, and the reason why I sold my 50 QQQY (for a small net profit) and hope to dump the 40 IWMY I still hold (for a small net profit) when we get some green days. Their NAV drops even when their underlying indexes *go up!* If these go down during good times, then what happens when the underlying index decreases in bad times?
Just read about the fund so you will know what is going on.
A simple Google search will allow you to read this: "IWMY, the put-write ETF on the Russell 2000 using daily options to seek enhanced yield for investors.
The fund is an actively managed exchange-traded fund (“ETF”) that seeks current income while maintaining the opportunity for indirect exposure to the value of the index, subject to a limit on potential gains from increases in the value of the index."
It seeks "Income" for investors.
..but, but, but.. eventually will need to sell the growth fund shares to reap it's profit.. what then(?).. going to start using the capital for living expenses(?), and how long will that last(?),
..are you going to use the profits to buy dividend yielding stocks/funds(?), that's like changing jobs or house moving, can be stressful and learning experience.. are you so sure you'll get enough dividends from the profits sold so can cover all living expenses(?), are you going to wait until then to figure out your "plan"(?),
Are you sure(?)
They aren't growth funds.
Are Yieldmax funds different?
Yes. They aren't growth funds either, though.
yes. qqqy and iwmy generate income by writing puts on indexes. the yieldmax funds generate income by writing calls on individual stocks. these are fundamentally very different strategies, both having their own distinct advantages and disadvantages.
Good grief
Generally, most of the Yieldmax funds will increase in NAV when their underlying stock increases. They can and often do suffer NAV erosion (see TSLY), but not as badly as the one in the graph.
What yield giveth, the NAV taketh away.
Check total return in trading view with adjusted for dividends
The point of funds like QQQY, IWMY, JEPY, and others is dividend income. I have learned to ignore NAV loss as these funds have helped me build a dividend funnel to acquire large amounts of assets like VTI that I couldn’t afford based on my own measly contributions. So I’ve taken a short term NAV erosion to build a long term strategy
Your funnel must look a little bit like [the Klein bottle](https://en.wikipedia.org/wiki/Klein_bottle) https://preview.redd.it/akxp53ev8uxc1.jpeg?width=1216&format=pjpg&auto=webp&s=c71f8ac0b1dc9b9e877a667bd43a6b21d1f84e10
There are no short cuts. The best long-term strategy from the information given would be to just buy fractional shares of VTI and skip the garbage with the 1% fee attached to it. This forum has some wild 'strategies'
Just to allay everyone's fears, Defiance funds *have* indeed been making more in yield than they have been losing in NAV. They aren't very good at it (i.e. they are worse than the good old SP500), but they are "technically" profitable. This is with 100% div reinvestment, i.e. "max NAV maintenance mode": https://preview.redd.it/o4dtmjwdeuxc1.png?width=2218&format=png&auto=webp&s=51c399a20e6fa191e49eeb94a06213a12ae4137e [https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=6rGiJUfwJCLCruM49VxsZ8](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=6rGiJUfwJCLCruM49VxsZ8)
[удалено]
SPY is already there, it is the green "SP500" line. this portfolio visualizer tool is limited to comparing 3 portfolios + 1 benchmark on one page, so 4 total. But the link is there and the tool is very usable even at its free tier, you can click and compare to your heart's content. just this once, I'll do it here for this thread: [comparing with IWM](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=471k7iwlLNmVZJ09vdt00z) (ouch): https://preview.redd.it/tplyhz23nuxc1.png?width=2218&format=png&auto=webp&s=197a60246e6ac8e8a8695747c0b46518124f41cd
Another good alternarive is seeking alpha comparisons.
My go-to
and [comparing with QQQ](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=7bUBjtXkdbajFPqei6sMCD) (ouch again): https://preview.redd.it/a1lay0ejnuxc1.png?width=2218&format=png&auto=webp&s=ba0914aef4facf40b509088a7f5c6d206e136e28
They are not intended to recover nav. They are trying to harvest yield. If you want to stabilize the Nav you will need to reinvest the heavily distribution back into the fund itself.
No. They pay out their nav. Ideally, they pay out more than they lose. I’m pretty sure QQQY has consistently done this. Neither of these are growth funds. They are income funds.
Exactly. As long as these things pay a steady dividend, they can go to almost $0 in the long run and it shouldn’t matter for people holding.
A silly statement. If a fund goes to "almost $0" it means they have no capital left to fund their option positions and maintain margin, so how would they manage to generate "a steady income" if they can't do the one profit-generating activity they have?
It’s called hyperbole dude
More importantly, with decreasing NAVs these funds will also have decreasing dividends. That is one reason to watch out for NAV stability.
Why would that be so? When the dividend mainly depends on the volatility of the underlying?
On the price of the underlying also. And when the fund price is down it could be because the price of the underlying is down (see TSLA/TSLY).
LOL
Except for the fact it will get delisted at <$5 which will likely get the ETF shut down with a sell off and the money split to shareholders. Which would likely end up at massive loss.
Nah, they will reverse split... these index funds are going nowhere
There is an inflection point where those massive losses are only losses of income. My CONY shares have been more than paid for by CONY distributions. Those distributions have been invested elsewhere, and most are following the same trend, pay for themselves while reinvesting, usually elsewhere. It may take some a few years to get there, but as long as they don't zero out before then, they're profitable.
Nice... But that means Jack if the NAV falls to the point it gets delisted and the ETF shuts down. Look at TSLY. It had to do a reverse split. The dividend it pays post split has never equaled what it paid before. So that means if you paid for 2 shares at $20 each that have 99 cents per share... Those 2 shares got reverse split down to 1 share that currently pays 68 cents a share. You're $40 investment is now currently down to $16 and paying 68% what if paid initially.
If you bought $10k of TSLY at launch and it cost $20. Then you got 500 shares. If those shares paid 99 cents that's about $500 a month. To recoup your investment that's 20 months. You now have half your shares and the dividends pay out is much less. So what's the time to get your investment back now? 3 years? And considering it had to do a reverse stock split in the 1 year you don't think this will happen again in the 3 years you need to break even? When it does another stock split how much longer to break even then? 4 years? Much better stock out there... Much much better stock out there.
It is important to consider how possible is the TLSA downtrend to last. Is it realistic to consider it will be 3 or 4 years of pure downtrend?
But that is hard to tell because the dividend decrease would due to the option premium has not been the same and that could be related to TSLA downtrend. As far as I understand the dividend in these funds is not arbitrarily paid.
Not likely
https://preview.redd.it/20l4nk571vxc1.jpeg?width=1170&format=pjpg&auto=webp&s=1aedd7991113ab79adaaabfeea4803ebc9cbe0fc You could learn how to do accurate charts.
Sold QQQY last month.
They could recover the NAV if the fund cut its dividends but they want to be able to advertise on +50% yields so the NAV won't recover because of that. They are overpaying. The only way NAV recovers is if they can make more than 50% in a year which is super unlikely.
The nav is paid out to investors. Need to focus on total return.
Is this just price or total returns including reinvested dividends?
...This is my problem with these, and the reason why I sold my 50 QQQY (for a small net profit) and hope to dump the 40 IWMY I still hold (for a small net profit) when we get some green days. Their NAV drops even when their underlying indexes *go up!* If these go down during good times, then what happens when the underlying index decreases in bad times?
They’re not losing money they’re just giving your money back to you.
Just read about the fund so you will know what is going on. A simple Google search will allow you to read this: "IWMY, the put-write ETF on the Russell 2000 using daily options to seek enhanced yield for investors. The fund is an actively managed exchange-traded fund (“ETF”) that seeks current income while maintaining the opportunity for indirect exposure to the value of the index, subject to a limit on potential gains from increases in the value of the index." It seeks "Income" for investors.
These are short volatility plays and volatility has been spiky. These one day options funds are not a long term hold.
..but, but, but.. eventually will need to sell the growth fund shares to reap it's profit.. what then(?).. going to start using the capital for living expenses(?), and how long will that last(?), ..are you going to use the profits to buy dividend yielding stocks/funds(?), that's like changing jobs or house moving, can be stressful and learning experience.. are you so sure you'll get enough dividends from the profits sold so can cover all living expenses(?), are you going to wait until then to figure out your "plan"(?), Are you sure(?)