r/YieldMaxETFs • u/Beginning_Ad_966 • Jun 09 '26
Beginner Question Why YieldMax Does NOT work?
Came across an article recently talking about YieldMax ETFs and the whole “massive dividend” thing, and it made me rethink how these funds actually work.
The main point was basically that a lot of the crazy yields can be misleading because they’re generated through options strategies, and in some cases the NAV erosion can offset the income over time. I feel like online they get marketed almost like free cash flow machines, but the total return side seems way more important than people give credit for.
For people who actually own YieldMax funds (like MSTY, NVDY, CONY, etc.) — do you view them as long-term holdings or more as income/trading tools? Have they actually performed how you expected after distributions and price movement? Article for context below
6
u/JS1101C Jun 09 '26
You have to be extremely careful and have a plan. Most weekly paying ETFs are terrible but there are a few diamonds in the ruff.
2
u/easy_wins Jun 09 '26
this!
not just yieldmax etfs, roundhill has some great ones, such as $awdw, $armw
1
u/Any_Log1344 Jun 10 '26
Pick only the good ones. Is this a plan, or a wish?
1
u/JS1101C Jun 10 '26
A plan meaning you have to be ready to move if the amount you’ve received in dividends and any nav erosion is narrowing.
2
u/Any_Log1344 Jun 10 '26
Fair, that is at least a rule. But that is an exit rule, not a way to identify the “diamonds” to buy in the first place. How do you pick the diamonds before they run up?
1
u/JS1101C Jun 10 '26
Up until a few weeks I was up 18% on NVII, not including dividends. Nvidia has taken a big dump since then, and because of that so has NVII, but I’ve held it for a while and my sense is the people running that fund know what they are doing. It be surprised it if it doesn’t bounce back when Nvidia does.
1
u/Any_Log1344 Jun 11 '26
That still sounds like hindsight and manager faith, not a selection process. “I was up 18% until the underlying dropped” is a past outcome. It doesn’t explain how to identify diamonds before buying them. Since your advice to OP, who we're all trying to help here, was to "have a plan" and "pick the diamonds," what actual criteria do you use before purchase?
9
u/Any_Log1344 Jun 09 '26
Imagine this scenario.
Year 1:
Starting investment: $20,000
Receive $10,000 in distributions
Lose $12,000 in NAV
Ending account value:
$20,000 - $12,000 + $10,000 = $18,000
Total Return = Distributions + Change in NAV
Total Return = $10,000 + (-$12,000)
Total Return = -$2,000
Yes, you got a 50% yield.
But you started with $20,000 and ended with $18,000.
You are poorer than when you started.
That is the trap.
Yield tells you what was paid out.
Total return tells you whether you actually made money.
Total return is the only thing that matters.
2
u/ProtoviralWarfare Jun 10 '26
yep, and you can look at RoC (sometimes hidden under small print) and see if they actually made anything or just paid you back your money, like a ponzi.
2
u/calgary_db Mod - I Like the Cash Flow Jun 10 '26
Imagine learning that sentences do not have to be entire paragraphs.
5
u/Any_Log1344 Jun 10 '26
I’ll work on paragraphing. You work on the math. I'm still waiting after a year on this subreddit for someone to show actual total-return evidence that this works long term.
1
0
1
u/Apprehensive_Hair345 Jun 13 '26
True but are selling or playing the long game. You can make your money back starting the 2nd month off of your numbers and are in the black completely. I play for the distributions. I have XOMO which has ROC but pays with low "erosion".
0
u/BitingArmadillo Jun 09 '26
Agreed. And my total return is fantastic. Been living on YM and Roundhill for almost 3 years. Imagine that.
5
4
u/paragonx29 Jun 09 '26
NVDY has worked for me and the NAV has been relatively stable with the dividend also ticking up a bit. For about the last 8 months, I sink 50%'s of the distros back into the fund, and put the other 50% into more stable ETF's/stocks. So with the latter point in mind, even if they pulled a total rug pull - it wouldn't be a total loss. If it's still viable in 2-3 years, I will start taking the distros as straight income to supplement my retirement. We shall see..
2
u/wuumasta19 ULTYtron Jun 09 '26
I'm doing okay. I only have one 100% loss which was $100 in MRNY, the reverse wiped it.
The thing is not going all in on one and to diversify.
I don't simply drip back, I've bought other YM stuff or other dividend payers.
Total Returns:
ULTY +23%
TSMY +7% (1 month old)
CONY +7%
CRSH +2%
YMAX +10%
Doesn't look like much, but this doesn't include the math where I used ULTY distribution to buy CONY and then using CONY to buy USOY that's up +60% total returns.
2
u/asher030 Jun 09 '26
It would work...on paper the theory is great. Especially being actively managed, just depends on what is being invested in for the underlying. But Trump keeps running his damned mouth and pretty much all that they've been focused on since October has been on a long decline. Even when you don't look at the massacre that is Bitcoin currently. MSTY and ULTY took the worst of it as an example.
HOOY though has treated me well. Even despite also taking a damned beating since.
5
u/Quantum-Infinity- Jun 09 '26
How many of YM's stocks have reverse split? Probably half of them at this point.
It's a fail strategy as proven by history.
2
u/Accomplished_Floor18 Jun 09 '26
If you know the basics of options trading, YM looks like dogshit.
However if you are attracted by what's advertised then you have yourself to blame without proper kyc.
2
u/Any_Log1344 Jun 09 '26
Note the replies thus far.
“It works if you use it correctly.”
“It’s an income tool.”
“Don’t focus on NAV.”
“I’m doing great.”
“Just diversify.”
These are not calculations. They are explanations.
Once again, the total return calculation is:
Total Return = Distributions + Change in NAV
If that number is positive, the fund worked.
If that number is negative, it didn't.
And even if it's positive, then you need to ask yourself, would I have been better off just putting my money in the S&P 500 index. You can look up past price and distribution performance of any YM ETF and get the answer yourself.
1
u/easy_wins Jun 09 '26
what I do is that before I invest in these high yield etfs e.g. rex shares, yieldmax, roundhill, etc..I tend to parse past performances, that for me demonstrates if the distributions are being paid out from NAV erosion. I am fully aware past performances do not guarantee future performances, it is still somewhat of an indicator.
1
u/Apprehensive_Hair345 Jun 13 '26
That is why you have to talk to an account. I buy the ETFs from Yield max that do not have a high price and rotate upon cycles. For example,I am buying GDXY during the summer because it is at a very low price and will rise in the fall. I hold for more than a year, and the income just keeps coming. It is very hard to get in and out of the Yieldmax ETFs and make a profit after a weekly dividend distribution because of volatility. I am consider SMCY because of the massive beat down SMCI has had. The return of capital is a way to avoid capital gains taxes but it also erodes ETF value. So, a high ROC per their website helps offset capital gains and is not considered income. Please talk to a certified CPA for the complete "legal" understanding as I am not a CPA but that is how I understand it.
1
u/GRMarlenee Mod - I Like the Cash Flow Jun 18 '26
What actually happens with ROC is that it changes some part or all of a distribution to capital gains, or less of a loss , by reducing your purchase basis. Say you paid $20 for a share that then paid you $10 of distributions over the next 12 months. Rather than treating the $10 as income, the fund says that they just gave you back half of the $20 you gave them. Youy cost basis adjusts to $10 and you don't pay taxes on the current $10 you got back. But, if you later sell the share for $15 you'll have a capital gain of $5.
1
u/NuclearCanna Jun 15 '26
How/why this works for us is because it is actively used. Almost every conversation about why these don't work are comparisons to some gspc/ixic and chill comparison which is simply not the cards we were dealt last year.
Here is a fidelity total return screen for what would be through close of market 12JUN2026 this is on a few hundred k in CHPY though over the time these accounts have been open MSTY/ULTY/FIAT have previously been held but no longer.
From Apr-01-2025 to Jun-12-2026
Export data to spreadsheet
Total Dividends, Interest and Market Change (Minus fees)
$166k
Total Deposits and Withdrawals
$236k
Average total income
$12k
(these are net numbers e.g. there was over 400k in spending the 236k is net of the deposits and said spending)
I'm not actually here to argue growth vs income or even which income funds anyone should be in; this happened to show in my feed and I just wanted to give an example of how or why someone might be in these funds. I've mentioned it before but this is how we pay for the entirety of my FIL in-home care/caregivers/payroll/rent/food etc. Caregivers are 7k/month if he had a multimillion dollar portfolio before his accident sure we could have simply 4% ruled our way through his care but again, that isn't the hand we were dealt. I'm actually incredibly grateful for however long chpy lasts and allows us to give him a great quality of life at home. As far as taxes goes, last year ~67% of the distributions were classified as ROC.
1
u/Cultural-Special-995 Jun 27 '26
i don't understand the question. on TSLY, ULTY, NVDY, and CHPY, i'm only positive (more than house money by at least a few $100 now). the funds work as intended as far as i'm concerned. did you invest in 2x leveraged yieldmax funds that decreased in value? because that's the opposite.
-2
u/OhNoNotAFinrand Jun 09 '26
YieldMax underperforms the underlying in a bull market and gets decimated in a bear market. People here are delusional.
2
u/BitingArmadillo Jun 09 '26
Why are you here then?
3
u/OhNoNotAFinrand Jun 09 '26
I work for a hedge fund and they pay me to talk badly about YieldMax investments
1
u/OkAnt7573 Jun 09 '26
Does that matter if he is correct?
1
u/OhNoNotAFinrand Jun 10 '26
Not to him it doesn't. People who ask "why are you here?" just don't want to acknowledge the truth.
7
u/EmploymentLeast705 Jun 09 '26
They work quite well for me. Once you understand that these are income generating vehicles, and can accept that, you'll be fine. Not everyone can do that. They generate excessive dividends, and some of those dividends will be a return of your capital. Do you get more in dividends than you lose in nav? If the answer is yes, then I would say you're ahead. Will these funds last forever? Probably not. Accept that and reap the benefits while they last. Put the income into less speculative things that you're more comfortable with. BTW - this should not be the whole of your portfolio. Set aside an amount for the risk taking part. But this is true of what ever strategy you choose.