What Are YieldMax ETFs: Returns, Peer Comparison & More

Yieldmax ETFs have been in the headlines after giving staggering returns to investors. But how good are they when compared to their head on competitor. 

An ETF is a marketable security that tracks an index, commodity or bonds. It works like a mutual fund but trades like a stock. ETFs don’t try to beat the market, but simply replicate the performance of the index. They are passively managed and have lower fees than mutual funds. 

A beginners’ Guide To YieldMax ETF

YieldMax ETFs have become quite popular among investors seeking to generate income from their investments. These investment companies employ options-based strategies to yield income from securities.

Advantages Of Investing

One of the advantages of investing in YieldMax ETFs is their ability to produce income from assets not typically linked to earnings. This makes them a valuable asset in any investor’s portfolio. 

In contrast to other fund types, YieldMax ETFs do not directly invest in the underlying stock or ETF. Instead, they utilize options-based strategies for generating income by trading options on the underlying securities and profiting from the premiums received.

A significant benefit of YieldMax ETFs is their capability to offer investors a source of income during market volatility. Due to their utilization of options-based strategies these funds are structured to perform across a range of market conditions. This feature makes them an attractive choice, for investors seeking an income stream.

YieldMax ETFs represent an investment opportunity that can deliver investors with monthly income flow which contributes. From securities, these funds provide a dependable and appealing avenue to invest in assets that are not commonly linked with monthly earnings. 

Calculation Of Distribution Rate

The distribution rates of these ETFs are calculated on yearly basis using the ETF’s Net Asset Value (NAV) which is like the share price of a listed stock. This net asset value is divided by the product of Distribution per share which are dividends given through-out the year.

For Example:

Semiconductor Option Income ETF (ticker symbol: SEMY) gives a distribution per share of $0.5 and it is distributed over every month. Considering the NAV of the ETF as $20 the distribution rate will be:

Distribution Rate = ($0.50 * 12) / $20 * 100 = 30%

This 30% resembles the total return or absolute return an investor is getting in the year.

Peer Comparision Of Yieldmax ETFs & Kurv Invest ETFs

The comparison of Kurv Invest will be done with Yield max ETFs. The distribution rate, as mentioned earlier is just the return an investor is getting at the end of the year against the original NAV. Kurv Invest has six ETFs with more to come in the future.

Kurv Invest offers ETFs for Amazon, Apple, Google, Microsoft, Netflix, and Tesla. The focus is on the Tesla 1 (TSLP), with a distribution rate of 17.32%, to see if a higher yield is better or worse for the ETF. While TSLP’s distribution rate is lower than TSL’s current distribution rate, the analysis will be whether TSL outperforms TSLP.

The distribution rates for the other Kurv Invest ETFs: Amazon (15.85%), Apple (11.82%), Google (11.60%), Microsoft (10.12%), and Netflix (13.33%). Yield Max ETFs has 18 different ETFs with varying yields, depending on the underlying company’s volatility. 

Tesla’s distribution rate is currently 61.78%, Apple’s is 28.89%, AMZ’s is 33.5%, Google Option Income Strategy ETF’s is 17.89%, Netflix’s is 46.32%, and MSO’s is 40% while Yield Max has higher yields than Kurv Invest.

Here’s a comparison of price returns to see which ETFs have been performing the best so far. Price return does not include the dividend.

It appears that TSLP has experienced a decline of 20.5%, while the underlying Tesla has also declined, causing ETFs like APY to also decrease by 2.24% in the past 146 days. These ETFs were introduced in October 20123.

However, GOOP, which is Kurv’s Google option income strategy, has shown an increase in price return by 10.78%. One advantage of Kurv Invest ETFs is that they choose higher strike prices, which allows for more upside potential with the underlying stock.

However, this results in lower premiums for option contracts, which leads to lower yields. Conversely, Yield Max goes closer to the money, resulting in higher yields with less potential for an upside gain with their ETFs. 

MSF has shown an increase of 13.84%, while NFLP, the Netflix Kurv ETF, has increased by 28.83% and the Amazon ETF has increased by 21.04% in the past 149 days. 

Yield Max dividend ETFs like Apple and MSF have shown a return of 6.89% and a decline of 5.83%, respectively. It is worth considering that dividends have an impact on the ETFs’ return, and Yield Max pays out a significant amount of dividends to its shareholders every month. 

It is also important to note that on the ex-dividend date, the share prices drop by the dividend amount, which affects the ETFs’ return. When comparing Tesla’s strategies of Yield Max and TSLP, it can be seen that since 10/31/2023, Yield Max has performed better – TSLP is down by 12.2%, while Tesla is down 99.51%. In conclusion, the Yieldmax ETFs have overall performed better than associated asset.

Summary

YieldMax ETFs generate income from non-traditional assets and have higher distribution rates compared to direct competitors. One of the major benefits of investing in YieldMax ETFs is that they can produce income from assets that are not typically linked to earnings. Kurv Invest will be compared with YieldMax ETFs, which have performed better.

Disclaimer

The views and opinions stated by the author or any people named in this article are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks, cryptos, or other related indexes comes with a risk of monetary loss.