Is This ETF Still an Unstoppable Yield Machine?

I last wrote about YieldMax Ultra Option Income Strategy ETF ULTY in August 2025. At the time, the fund was basking in investor attention and cash inflows, with enthusiasm driven by an 85% “distribution rate,” but I didn’t love its performance.

I decided to look at it again. And, spoiler alert, ULTY still isn’t a great investment.

The fund’s hefty distributions rely heavily on market volatility, which increases the value of the premiums it earns from selling call options. The fund’s management team amplifies this effect by targeting individual stocks with high levels of implied volatility, such as AST SpaceMobile ASTS, Rigetti Computing RGTI, Reddit RDDT, and Upstart Holdings UPST.

A year ago, I was skeptical about the fund’s strategy, pointing out that its eye-catching yield payments came at the cost of an eroding principal value. From a total-return perspective, performance was much less impressive.

What Have You Done for Me Lately?

Today, ULTY is still suffering from many of the same problems. As shown below, the fund’s net asset value has continued to trend lower, albeit at a somewhat slower rate than in the past.

Over the past 12 months, the fund’s NAV has dropped by more than 50%, from $60.0 per share to about $26.30 as of Aug. 31, 2026.

Why the decline in NAV? It’s mainly because such a large portion of the fund’s distributions is classified as returns of capital. Based on the information published on its website, 100% of the fund’s most recent distribution (paid on Sept. 1) was considered a return of capital. Although YieldMax claims returns of capital are a tax treatment and not necessarily reflective of an economic loss, a fund can’t continuously distribute more income than it earns without eroding shareholder value. My colleague Jeff Ptak estimates that the fund has lost about $100.0 million (in net income) from inception through August 2026 while making more than $1.5 billion in total distributions.

As a result, total returns have also continued to lag. As shown in the chart below, a $10,000 investment made in March 2024 would have been roughly flat by August 2026. The Nasdaq 100 (a reasonable proxy for the type of highly volatile, technology-related stocks the fund typically invests in), on the other hand, enjoyed cumulative returns of 64.2%.

Even worse, the fund fell slightly behind returns on the 90-day T-bill—essentially a zero-risk asset—over the same period. That’s not a great result for a fund that aims to “maintain participation in share price gains” in its underlying holdings.

Performance has continued to lag despite a series of changes to the fund’s strategy over time. Starting in November 2024, the fund began implementing some risk-control measures, including moving to an options collar strategy. This approach involves buying put options (in addition to writing calls) on individual stock holdings. The fund forgoes upside potential by selling call options, but the put options also limit potential losses.

In early 2025, the fund’s management team moved away from using synthetic options strategies; instead, it typically owns the underlying stock in addition to writing calls and buying puts. And in March 2025, it shifted to a weekly payment schedule that was meant to reduce NAV declines related to distributions. Because the fund earns option income continuously, a weekly distribution schedule means there’s less of a lag between when it collects income and when it pays it out to shareholders.

The fund made some additional changes to its strategy in December 2025. It now has the ability to invest up to 50% of its lower-volatility stocks; it also made some changes to the way it implements its options strategy. Two of the fund’s three comanagers were replaced at the same time.

As I mentioned above, the fund’s NAV has been declining at a somewhat slower pace than in the past. However, I’m still skeptical about the fund’s long-term prospects, as premium income has been nowhere close to high enough to fund its distributions thus far.

Final Thoughts on ULTY

At the end of the day, total returns, not income, are the measure that matters for investors. With respect to the fund’s future risk/reward prospects, there’s plenty of reason to be doubtful. Results so far have been mixed at best, and there’s a nonzero chance that something will go wrong with the fund’s complex mix of long puts, short calls, and individual stock picks.

The famous quote from Legg Mason strategist Raymond DeVoe Jr. bears repeating: “More money has been lost reaching for yield than at the point of a gun.” In fact, the fund’s name itself is something of a red flag. Many of the fund industry’s worst disasters have been among funds that explicitly pursue yield-maxxing strategies.

Jeffrey Ptak contributed to this article.