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Globe and Mail
04-07-2025
- Business
- Globe and Mail
AIYY Is an Income ETF Monster
Key Points AIYY pays a distribution yield of more than 100%. But it's mainly returning its investors' cash through those distributions. It's tethered to which has been highly volatile over the past year. Over the past three years, Tidal Financial Group released several high-yield exchange-traded funds (ETFs) with jaw-dropping yields. One of the highest-yielding ones was the YieldMax AI Option Income Strategy ETF (NYSEMKT: AIYY), which was launched in November 2023 and currently pays a distribution rate of 100.8%. Many might scoff at any income investment that pays a monstrous 100% yield, but is it really a high-yield trap? How does this ETF pay a distribution rate of more than 100%? To understand how an ETF like the YieldMax fund works, we should discuss covered call options. In a covered call, you sell a call on a stock you own by choosing an option with a strike price that's higher than the current share price and an expiration date in the future. The buyer pays you a premium for the call, and the value of that option varies according to the stock's volatility and its proximity to the expiration date. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » If that stock is still trading below the covered call's strike price at its expiration date, you'll keep your shares and the premium, and the buyer will leave empty-handed. But if the stock has climbed above the strike price, you'll keep the premium but end up selling your shares at that strike price. Many investors write covered calls on their own stocks to generate passive income. That strategy works well when the market trades sideways, but it can backfire during big rallies. To offer investors an alternative to handling the covered call strategy manually, Tidal launched covered-call ETFs, which are pinned to volatile stocks that pay out high premiums that support its distributions. Why is the YieldMax ETF messier and riskier than simple covered calls? The YieldMax fund mainly sells short-term calls (with strike prices 5% to 15% higher than the current stock price) each month to boost its distributions, while parking some of its excess cash in short-term Treasuries to earn interest. This particular ETF's underlying stock is (NYSE: AI), the divisive enterprise artificial-intelligence AI software maker that still trades more than 40% below its initial public offering (IPO) price. But unlike a regular investor, who writes covered calls to generate passive income, the ETF doesn't actually own any shares of Instead, the fund writes covered calls on a "synthetic" long position comprised of longer-dated call and put options instead of owning the stock. That approach requires less capital, since it doesn't need to buy 100 shares of for each covered call. If shares decline, the ETF's synthetic position is designed to match those declines. However, that requires perfect hedging, which can be challenging. Long-dated options used in synthetic positions also decay over time, and the fund needs to keep rolling those positions forward to keep up with shares. The ETF will underperform over the long run trades far below its IPO price, but its revenue growth accelerated again in fiscal 2024 and fiscal 2025 (which ended this April). And it recently extended its crucial deal with Baker Hughes, which accounts for over 30% of its revenue, for another three years. Those catalysts -- along with its fresh federal contracts, cloud partnerships, and generative AI tools -- could drive the stock higher over the next few years. But even if that happens, the YieldMax ETF will underperform stock as its covered call strategy limits its gains. Ideally, it can narrow that gap with its big distributions -- but the messy way it uses synthetic long positions could cause it to lag behind stock. To make matters worse, investors need to pay an annual expense ratio of 1.67% to execute the fund's convoluted strategy, which is much more expensive and confusing than simply buying shares and manually writing covered calls. That's a big part of why the ETF's shares declined 64% over the past 12 months as stock only fell 14%. Even if you had reinvested the fund's big distributions, you would have still ended up with a negative total return of 24%. Investors are mainly getting back their own money Lastly, most of the ETF's distributions are a return of capital (ROC), which means it's mainly returning its investors' cash instead of generating any fresh income. That strategy is constantly eroding its net asset value (NAV) -- which has already dropped 64% over the past 12 months -- and will further limit its upside potential. That's why that 100.8% distribution yield doesn't mean you'll magically double your investment by buying its shares and waiting for the next distributions. That ratio simply means that if its most recent monthly distribution were paid out every month for a year, its total annualized payout would be equivalent to 100.8% of the ETF's current price. But that ratio looks backward instead of forward, and its monthly payouts could decline sharply if volatility declines or its stock crashes. Investors should avoid this "income monster" The YieldMax AI Option Income Strategy ETF might seem like an income-generating monster, but it's a dangerous investment. You're mainly getting back your own money, you're being charged for it, and the ETF will still underperform stock if it rallies -- yet experience steeper declines if it pulls back. Investors should avoid it and stick with more-reliable dividend stocks instead. Should you invest $1,000 in Tidal Trust II - YieldMax Ai Option Income Strategy ETF right now? Before you buy stock in Tidal Trust II - YieldMax Ai Option Income Strategy ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Tidal Trust II - YieldMax Ai Option Income Strategy ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $976,677!* Now, it's worth noting Stock Advisor 's total average return is1,060% — a market-crushing outperformance compared to180%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 30, 2025
Yahoo
04-07-2025
- Business
- Yahoo
AIYY Is an Income ETF Monster
AIYY pays a distribution yield of more than 100%. But it's mainly returning its investors' cash through those distributions. It's tethered to which has been highly volatile over the past year. 10 stocks we like better than Tidal Trust II - YieldMax Ai Option Income Strategy ETF › Over the past three years, Tidal Financial Group released several high-yield exchange-traded funds (ETFs) with jaw-dropping yields. One of the highest-yielding ones was the YieldMax AI Option Income Strategy ETF (NYSEMKT: AIYY), which was launched in November 2023 and currently pays a distribution rate of 100.8%. Many might scoff at any income investment that pays a monstrous 100% yield, but is it really a high-yield trap? To understand how an ETF like the YieldMax fund works, we should discuss covered call options. In a covered call, you sell a call on a stock you own by choosing an option with a strike price that's higher than the current share price and an expiration date in the future. The buyer pays you a premium for the call, and the value of that option varies according to the stock's volatility and its proximity to the expiration date. If that stock is still trading below the covered call's strike price at its expiration date, you'll keep your shares and the premium, and the buyer will leave empty-handed. But if the stock has climbed above the strike price, you'll keep the premium but end up selling your shares at that strike price. Many investors write covered calls on their own stocks to generate passive income. That strategy works well when the market trades sideways, but it can backfire during big rallies. To offer investors an alternative to handling the covered call strategy manually, Tidal launched covered-call ETFs, which are pinned to volatile stocks that pay out high premiums that support its distributions. The YieldMax fund mainly sells short-term calls (with strike prices 5% to 15% higher than the current stock price) each month to boost its distributions, while parking some of its excess cash in short-term Treasuries to earn interest. This particular ETF's underlying stock is (NYSE: AI), the divisive enterprise artificial-intelligence AI software maker that still trades more than 40% below its initial public offering (IPO) price. But unlike a regular investor, who writes covered calls to generate passive income, the ETF doesn't actually own any shares of Instead, the fund writes covered calls on a "synthetic" long position comprised of longer-dated call and put options instead of owning the stock. That approach requires less capital, since it doesn't need to buy 100 shares of for each covered call. If shares decline, the ETF's synthetic position is designed to match those declines. However, that requires perfect hedging, which can be challenging. Long-dated options used in synthetic positions also decay over time, and the fund needs to keep rolling those positions forward to keep up with shares. trades far below its IPO price, but its revenue growth accelerated again in fiscal 2024 and fiscal 2025 (which ended this April). And it recently extended its crucial deal with Baker Hughes, which accounts for over 30% of its revenue, for another three years. Those catalysts -- along with its fresh federal contracts, cloud partnerships, and generative AI tools -- could drive the stock higher over the next few years. But even if that happens, the YieldMax ETF will underperform stock as its covered call strategy limits its gains. Ideally, it can narrow that gap with its big distributions -- but the messy way it uses synthetic long positions could cause it to lag behind stock. To make matters worse, investors need to pay an annual expense ratio of 1.67% to execute the fund's convoluted strategy, which is much more expensive and confusing than simply buying shares and manually writing covered calls. That's a big part of why the ETF's shares declined 64% over the past 12 months as stock only fell 14%. Even if you had reinvested the fund's big distributions, you would have still ended up with a negative total return of 24%. Lastly, most of the ETF's distributions are a return of capital (ROC), which means it's mainly returning its investors' cash instead of generating any fresh income. That strategy is constantly eroding its net asset value (NAV) -- which has already dropped 64% over the past 12 months -- and will further limit its upside potential. That's why that 100.8% distribution yield doesn't mean you'll magically double your investment by buying its shares and waiting for the next distributions. That ratio simply means that if its most recent monthly distribution were paid out every month for a year, its total annualized payout would be equivalent to 100.8% of the ETF's current price. But that ratio looks backward instead of forward, and its monthly payouts could decline sharply if volatility declines or its stock crashes. The YieldMax AI Option Income Strategy ETF might seem like an income-generating monster, but it's a dangerous investment. You're mainly getting back your own money, you're being charged for it, and the ETF will still underperform stock if it rallies -- yet experience steeper declines if it pulls back. Investors should avoid it and stick with more-reliable dividend stocks instead. Before you buy stock in Tidal Trust II - YieldMax Ai Option Income Strategy ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Tidal Trust II - YieldMax Ai Option Income Strategy ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $976,677!* Now, it's worth noting Stock Advisor's total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 30, 2025 Leo Sun has no position in any of the stocks mentioned. The Motley Fool recommends The Motley Fool has a disclosure policy. AIYY Is an Income ETF Monster was originally published by The Motley Fool
Business Upturn
31-05-2025
- Business
- Business Upturn
Unity Wealth Partners and Tidal Financial Group Announce the Closure of the Unity Wealth Partners Dynamic Capital Appreciation & Options ETF (Nasdaq: DCAP)
By GlobeNewswire Published on May 31, 2025, 01:38 IST MILWAUKEE, May 30, 2025 (GLOBE NEWSWIRE) — Tidal Financial Group and Unity Wealth Partners today announced the upcoming closure and liquidation of the Unity Wealth Partners Dynamic Capital Appreciation & Options ETF (Nasdaq: DCAP). The Board of Trustees of Tidal Trust III has determined that closing and liquidating the fund is in the best interest of the fund and its shareholders. The Unity Wealth Partners Dynamic Capital Appreciation & Options ETF (the fund) will cease trading on the Nasdaq at the close of regular trading on June 13, 2025 (the 'Closing Date'), and will no longer accept creation orders as of that date. Shareholders may sell their holdings in the fund prior to the Closing Date through standard brokerage transactions, which may be subject to customary brokerage fees. After June 13, 2025, shareholders will be unable to buy or sell shares on an exchange and may only redeem shares through select broker-dealers. There is no assurance that there will be an active market for the fund during the period between the Closing Date and Liquidation. Between June 13, 2025 and June 20, 2025 (the 'Liquidation Date'), DCAP will begin liquidating its holdings and increasing its cash position in preparation for final distribution. During this period, the fund's portfolio will depart from its stated investment strategy and objective. On or around June 20, 2025, DCAP will distribute its remaining net assets to shareholders of record who have not sold their shares prior to liquidation. This final distribution will be made in cash on a pro rata basis and will generally be treated as a taxable event. Shareholders should consult their tax advisers to understand the potential implications related to capital gains, losses, or dividends arising from the liquidation. After the distribution of net assets is complete, the fund will be officially terminated. About Tidal Financial Group Formed by ETF industry pioneers and thought leaders, Tidal Investments LLC sets out to revolutionize the way ETFs have historically been developed, launched, marketed, and sold. With a focus on growing AUM, Tidal offers a comprehensive suite of services, proprietary tools, and methodologies designed to bring lasting ideas to market. Tidal is an advocate for ETF innovation. The firm is on a mission to provide issuers with the intelligence and tools needed to efficiently and to effectively launch ETFs and to optimize growth potential in a highly competitive space. For more information, visit Disclaimer: The above press release comes to you under an arrangement with GlobeNewswire. Business Upturn takes no editorial responsibility for the same. GlobeNewswire provides press release distribution services globally, with substantial operations in North America and Europe.
Yahoo
30-05-2025
- Business
- Yahoo
Unity Wealth Partners and Tidal Financial Group Announce the Closure of the Unity Wealth Partners Dynamic Capital Appreciation & Options ETF (Nasdaq: DCAP)
MILWAUKEE, May 30, 2025 (GLOBE NEWSWIRE) -- Tidal Financial Group and Unity Wealth Partners today announced the upcoming closure and liquidation of the Unity Wealth Partners Dynamic Capital Appreciation & Options ETF (Nasdaq: DCAP). The Board of Trustees of Tidal Trust III has determined that closing and liquidating the fund is in the best interest of the fund and its shareholders. The Unity Wealth Partners Dynamic Capital Appreciation & Options ETF (the fund) will cease trading on the Nasdaq at the close of regular trading on June 13, 2025 (the 'Closing Date'), and will no longer accept creation orders as of that date. Shareholders may sell their holdings in the fund prior to the Closing Date through standard brokerage transactions, which may be subject to customary brokerage fees. After June 13, 2025, shareholders will be unable to buy or sell shares on an exchange and may only redeem shares through select broker-dealers. There is no assurance that there will be an active market for the fund during the period between the Closing Date and Liquidation. Between June 13, 2025 and June 20, 2025 (the 'Liquidation Date'), DCAP will begin liquidating its holdings and increasing its cash position in preparation for final distribution. During this period, the fund's portfolio will depart from its stated investment strategy and objective. On or around June 20, 2025, DCAP will distribute its remaining net assets to shareholders of record who have not sold their shares prior to liquidation. This final distribution will be made in cash on a pro rata basis and will generally be treated as a taxable event. Shareholders should consult their tax advisers to understand the potential implications related to capital gains, losses, or dividends arising from the liquidation. After the distribution of net assets is complete, the fund will be officially terminated. About Tidal Financial Group Formed by ETF industry pioneers and thought leaders, Tidal Investments LLC sets out to revolutionize the way ETFs have historically been developed, launched, marketed, and sold. With a focus on growing AUM, Tidal offers a comprehensive suite of services, proprietary tools, and methodologies designed to bring lasting ideas to market. Tidal is an advocate for ETF innovation. The firm is on a mission to provide issuers with the intelligence and tools needed to efficiently and to effectively launch ETFs and to optimize growth potential in a highly competitive space. For more information, visit CONTACT: Contact Gavin Filmore at gfilmore@ for more information.
Business Insider
18-05-2025
- Business
- Business Insider
4 things traditional retirees can learn from early retirees, according to financial advisors
Early retirement isn't just for the rich. It's also for the financially savvy. Crunching numbers and pinching pennies may not be for everyone, but adopting some of the saving and investment strategies used by people aiming to retire early can help navigate market uncertainty and boost your overall growth potential. Here are four saving and investing strategies that financial advisors say traditional savers can use to reach financial independence. 1. Get serious about saving The FIRE (Financial Independence, Retire Early) lifestyle encourages young investors to boost their long-term growth potential by investing a majority of their income in the market. People pursuing FIRE tend to live a more frugal lifestyle, regardless of how much money they actually make. "If you retire at 55 and you live until you are 85 or 90, that's a lot of time in retirement," Carol Schleif, chief market strategist at BMO US Wealth Management, told Business Insider. She explained that the goal of FIRE has always been to "maximize income and spend more time enjoying retirement." FIRE encourages individuals to be more conscious consumers, live beneath their means, and not spend "every last penny." Even retirees who aim to leave work at a more traditional age can adopt a FIRE-inspired approach and increase the amount of income being dedicated to retirement savings as soon as possible. Increasing annual contributions to one of the best retirement plans, like a 401(k) plan or IRA, unlocks tax benefits while money grows with the market, benefiting from compound interest. Saving more money, however, goes hand in hand with prioritizing your budget. "Pick the three or four things that are a priority to you, spend what you want on those," Mike Venuto, cofounder and chief investment officer of Tidal Financial Group told BI. "If you approach budgeting as focusing on things you love as opposed to giving up comforts," he continued," you find that you don't end up caring about the little comforts that much." 2. Don't stress about short-term market volatility No one likes to check their stock portfolio's performance and see all red, but the FIRE community understands that these short-term fluctuations are a normal part of the business cycle. A core belief of FIRE is that the more time your money is in the market, the more it can grow. Even if there is a bear market or economic downturn, the classic buy-and-hold strategy allows investments to be part of the upswing when the market eventually recovers. "People are worried in the short run about the US dollar going down, and that bonds and equities went down," Schleif said. "If you take what happened in the last couple of years and stretch it out over the last 20 years, this is a blip in an overall long-term trend." Still, it is important to limit risk near retirement age, as you no longer have the time horizon to recover from a major loss. "There's nothing wrong with 'Vanguard and chill' for a 20-year time horizon," Venuto said. But if you are only a few years away from retiring, he suggests reducing your stock allocation, investing more in fixed-income assets, and building up your cash reserve. 3. Diversify your portfolio Whether you are part of the FIRE movement or are a traditional retirement saver, experts always recommend portfolio diversification within and throughout various market sectors. This not only limits risk if one area of the market declines, but it also allows investments to benefit from the areas of the market that are seeing growth. "Diversification is like owning insurance in your portfolio," Schleif said. "You don't buy the insurance when the house is burning down. You have the insurance ahead of time." Venuto said ETFs are one of the easiest and most affordable ways to diversify your portfolio. "The ETF structure for a taxable investor will always be a better return than a mutual fund or annuity," Venuto said. "It has the lowest fees and the most tax efficiency." Low-cost, broad-based mutual funds can be good in retirement accounts, "but if you're not investing in a 401(k) plan or one of the best IRA accounts, the ETF is a far superior vehicle," Venuto said. Compare Today's Rates 4. Learn as much as you can about money Financial education and community support are key in the FIRE movement, especially since many young adults start their careers not knowing much about topics like creating a financial plan or the importance of early retirement saving. From online chat boards and YouTube channels to in-person camps, FIRE offers multiple ways for people to get involved and learn financial literacy for themselves and their families. "There's a push to teach children about FIRE before they have money because we very much live in a consumer culture," Venuto said. You don't have to be committed to the FIRE lifestyle to follow FIRE influencers or join online communities for valuable finance knowledge and tips. Sure, a financial advisor is best for professional advice, but if you can't afford it — or prefer learning from like-minded savers —the FIRE community is a great place to start. "Folks are trying to learn from each other how to be a more conscious consumer," said Schleif. "Many FIRE habits stem from younger generations who were influenced by the devastation that older generations faced in '08 and '09."
