ULTY vs. MSTY: Which High-Yield ETF Wins?

Certainly, this yield is subject to change in the future. Still, the allure of a 90%+ distribution rate is what attracts many investors to the YieldMax Ultra Option Income Strategy ETF.

Another selling point of the ULTY ETF is its ultra-frequent payments. With the YieldMax Ultra Option Income Strategy ETF, investors will receive a cash distribution one per week. That’s much more frequent than many dividend stocks and ETFs that only pay once every three months.

Additionally, you can achieve portfolio diversification with the YieldMax Ultra Option Income Strategy ETF. Through a mix of stock shares and option positions, ULTY provides exposure to a variety of stocks, such as Affirm Holdings (NASDAQ:AFRM), Microstrategy  (NASDAQ:MSTR), Applovin (NASDAQ:APP), Rocket Lab USA (NASDAQ:RKLB), Oklo (NYSE:OKLO), IonQ (NYSE:IONQ), and Reddit (NYSE:RDDT).

ULTY’s Main Drawbacks

Granted, there are some issues to be aware of with the YieldMax Ultra Option Income Strategy ETF. For one thing, the ULTY ETF automatically deducts 1.3% (after a fee waiver) worth of annualized operating expenses from the share price. Hence, these expenses will drag the ULTY share price down slightly.

Also, the YieldMax Ultra Option Income Strategy ETF uses options-trading strategies that may include selling covered call options. This will generate income, but it will also tend to limit the potential upside of the ULTY share price.

It’s also possible for the share price of the YieldMax Ultra Option Income Strategy ETF to decline substantially. Sure, the weekly cash distributions have been enjoyable, but over the past year, ULTY’s share price declined by 48.93%.

MSTY’s Single-Stock Focus

Turning to the YieldMax MSTR Option Income Strategy ETF, this fund has similarities to the ULTY ETF, such as its use of covered call selling strategies to derive income. Furthermore, much like ULTY, the MSTY ETF is a real attention-getter with its 90.61% expected annual distribution rate (as of August 21).

For what it’s worth, the YieldMax MSTR Option Income Strategy ETF deducts 0.99% worth of annualized operating expenses. This compares favorably to the 1.3% in operating expenses that the YieldMax Ultra Option Income Strategy ETF will deduct.

Here’s a much more significant difference, though. Whereas the ULTY ETF provides stock and/or option exposure to a wide variety of stocks, MSTY is primarily focused on Microstrategy stock (along with some U.S. government bonds).

Just to recap, Microstrategy is a software company that holds large quantities of Bitcoin (CRYPTO:BTC). If you plan to own the YieldMax MSTR Option Income Strategy ETF, you’ll definitely want to have an optimistic stance on the future of Bitcoin and Microstrategy stock.

Another main difference between these two YieldMax ETFs is that the YieldMax MSTR Option Income Strategy ETF pays out its distributions on a monthly basis. This means that MSTY will offer less frequent reinvestment opportunities than the ULTY ETF.

No Guarantees With MSTY

A disadvantage that MSTY and ULTY have in common is that their 90%+ expected annual yields aren’t guaranteed to stay that high. Investors should continually monitor the yields of both funds and be prepared for the possibility of distribution rate reductions.

There’s also no assurance that the share price of the YieldMax MSTR Option Income Strategy ETF will go up. Like the ULTY ETF, the MSTY ETF involved covered call selling strategies that may limit the fund’s share-price upside; a steep decline in the share price is always a possibility, as well.

Notably, both Bitcoin and Microstrategy stock performed extremely well during the past 12 months. During that same time frame, however, the YieldMax MSTR Option Income Strategy ETF’s share price fell 28.28%.

Sure, the share price of ULTY declined even more than that. On the other hand, after witnessing the moon shots of Bitcoin and Microstrategy stock, investors may have been deeply disappointed with MSTY’s share-price performance.

ULTY vs. MSTY: Which One Wins?

It’s difficult to declare a “winner” as both the YieldMax Ultra Option Income Strategy ETF and the YieldMax MSTR Option Income Strategy ETF are intriguing funds for high-risk investors. After considering the differences, however, it appears that ULTY has the edge over MSTY.

While the YieldMax Ultra Option Income Strategy ETF experienced a steeper share-price drawdown over the past 12 months, the YieldMax MSTR Option Income Strategy ETF drastically underperformed its main underlying asset, Microstrategy stock. Regarding the two funds’ advertised distribution yields and operating expenses, they are fairly similar and don’t indicate an obvious winner either way.

Two main factors put the YieldMax Ultra Option Income Strategy ETF ahead of the YieldMax MSTR Option Income Strategy ETF. Specifically, ULTY is much more diversified in its holdings and pays its cash distributions much more frequently than MSTY.

With all of that in mind, you’re welcome to take a look at both the YieldMax Ultra Option Income Strategy ETF and the YieldMax MSTR Option Income Strategy ETF. Perhaps if you’re seeking strong portfolio exposure to Microstrategy stock, you might end up choosing MSTY over ULTY despite today’s head-to-head comparison.

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