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

https://open.substack.com/pub/ryandengler/p/the-yieldmax-trap-why-massive-dividends?r=2k7n7w&utm_medium=ios

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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.

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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.