ULTY ETF

YieldMax Ultra Option Income Strategy ETF is a high-yield ETF built to satisfy investors' thirst for income. Unfortunately, it doesn't deliver. Despite a seemingly high distribution rate, the Fund's strategy focuses solely on high-volatility assets, which is causing severe principal erosion and falling payouts for investors. ULTY's high turnover and mechanistic payout structure exacerbate its poor performance, and we think returns would likely worsen in a bear market.

YieldMax Ultra Option Income Strategy ETF has seen a significant price drop, losing nearly 50% since its IPO, despite high monthly distributions. The fund's total return to date is -11.94%, with a trailing dividend yield of ~74%. ULTY's top sector exposures are tech, healthcare and financials, but most top picks have underperformed in 2024, contributing to its poor performance.

YieldMax ETFs and I have a complicated relationship, but I recently gave their fund-of-funds ETF, YMAX, a positive rating. This gave me confidence when I found the YieldMax Ultra Option Income Strategy ETF. Unfortunately, I have identified several major risks and issues with the fund, and I am giving it a "sell" rating.

YieldMax Ultra Option Income Strategy ETF is recommended with a hold rating due to its income generation and high correlation with the NASDAQ Index. ULTY employs an actively managed covered options strategy across various tech sector equities, providing diversified exposure and potential income stability. Despite a high expense ratio of 1.24%, ULTY's forward distribution rate of 84.43% significantly outpaces QQQ's yield, justifying its cost for passive income seekers.

YieldMax Ultra Option Income Strategy ETF offers a high annual distribution rate of 83% by implementing covered call strategies. ULTY is an actively managed fund with changing holdings based on implied volatility levels and catalysts like earnings season. Strategies to utilize ULTY include implementing a dividend wheel approach or supplementing retirement income, but caution is advised due to tax implications and market uncertainties.

CHICAGO, MILWAUKEE and NEW YORK, July 16, 2024 (GLOBE NEWSWIRE) -- YieldMax™ today announced monthly distributions on the following YieldMax™ ETFs: ETF Ticker 1 ETF Name Distribution per Share Distribution Rate 2 30-Day SEC Yield 3 Ex-Date & Record Date Payment Date YMAX YieldMax™ Universe Fund of Option Income ETFs $ 0.6516 38.78 % 62.89 % 7/17/2024 7/18/2024 YMAG YieldMax™ Magnificent 7 Fund of Option Income ETFs $ 0.6365 35.78 % 46.89 % 7/17/2024 7/18/2024 ULTY YieldMax™ Ultra Option Income Strategy ETF $ 0.9948 83.72 % 0.00 % 7/17/2024 7/18/2024 Distributions may also include a combination of ordinary dividends, capital gain, and return of investor capital, which may decrease an ETF's NAV and trading price over time. The performance data quoted above represents past performance.

YieldMax Ultra Option Income Strategy ETF is a fund that actively manages to generate monthly income through covered calls on high-IV U.S.-listed securities before catalysts. The strategy is risky and can result in significant losses from just one mistake. Despite the fund's high annualized distribution yield, investors should steer clear of this risky investment.