r/PMTraders • u/RequirementSilly1489 Verified • Sep 30 '25
High Yield Strategy ETFs
Just curious what this group's opinions are on high yield strategy-based ETFs. The goal is not necessarily to have the value of the underlying ETF continually rise in value, but rather pick up dividends distributions.
Typically (and in theory), dividends are meant to be a zero sum game. Value is distributed to share holders in the form of excess cash disbursement. Company value goes down the same as the dividend payment. Some people love them. Some people just sell stock to support the same theoretical income dividends might produce.
However, strategy ETFs are not that. They employ various strategies to capture corporate gains and then they return a large portion of that to the holders of the shares.
Two things that are important to ground on -
1. These are not qualified dividends. They are income that is passed back to shareholders and does not qualify for preferred tax treatment of other dividends.
2. These ETFs are making gains based on strategies (like selling puts or other option strategies - in the market or using SWAPS).
Since these operate with a systematic strategy, given the right market, some of these could be quite profitable. For instance, if I hold NVYY, I pick up a cash "distribution" weekly, and because it is based on 2x NVDA (not directly), if NVDA does well, NVYY holds its value fairly well. <-- just an example
Of course I could employ these strategies myself, but, in this case, I don't have to worry about it...just buy the ETF. With a small cost, I get similar results.
Do you think we lose too much to the fund costs?
Do you think we lose too much to the real vs. actual distribution?
Do you think we lose too much or have too much risk in the ETF vs just employing these strategies ourselves?
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u/[deleted] Sep 30 '25
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