IWMY ETF

Demand for high-yielding stock investments surged in 2020, leading to the popularity of options-selling strategies, with funds like IWMY offering high yields but high risks. IWMY's strategy of selling daily in-the-money put options is fundamentally flawed, causing rapid NAV erosion and making it a yield trap. Despite positive total returns with dividend reinvestment, IWMY's declining AUM and unsustainable strategy make it a risky investment.

IWMY's 51% yield is unusually high and potentially unsustainable, with significant risks due to its options-based strategy and return of capital distributions. The fund's strategy involves selling short-dated put options on the Russell 2000, limiting upside potential and exposing it to unlimited downside. A substantial portion of IWMY's portfolio is invested in low-yield Treasuries, hindering its ability to outperform in bull markets.

IWMY's in-the-money option strategy with short expiration dates leads to capital decay. This leads to IWMY underperforming the Russell 2000 and other covered call ETFs like FEPI. Despite a 110.9% yield, IWMY's high distribution is unsustainable, primarily funded by return of capital, causing NAV deterioration. IWMY may suit a small, diverse portfolio in a flat market, but its risks outweigh rewards for most investors.

NEW YORK, Sept. 11, 2024 (GLOBE NEWSWIRE) -- Tidal Financial Group is pleased to announce upcoming changes effective September 26, 2024, to enhance the offerings of three Defiance ETFs:

IWMY is an ETF that uses options to try to generate high yields from the Russell 2000 (IWM). It achieves this by selling cash-covered puts, which limits potential upside but provides downside protection. IWMY only outperforms IWM in a range-bound market, like 2024 so far.

Defiance R2000 Enhanced Options Income ETF (IWMY) is an income-oriented fund based on the Russell 2000 small-cap index. IWMY sells short-dated puts on the Russell 2000 to generate income, but most of its distributions are return of capital. The fund's high yield may not be sustainable due to the majority of distributions being return of capital.

IWMY is an actively managed ETF focused on generating current income for investors. The fund uses a strategy of holding U.S. Treasuries as collateral to reduce counterparty risk and selling put options on small-cap indices. A "higher for longer" interest rate scenario has reduced the net return on small caps, suggesting a possible upside in a rate-cutting cycle.