$YIELDMAX PLTR OPTION INCOME STRATEGY ETF(PLTY)$ $YieldMax MARA Option Income Strategy ETF(MARO)$ $YIELDMAX NVDA OPTION INCOME STRATEGY ETF(NVDY)$
They say there’s no such thing as a free lunch, yet YieldMax appears to be offering some of the highest yields in the market—though not without a cost. Despite the risks, the firm has managed to attract nearly $10 billion in assets under management (AUM).
One of the most common questions we get about ETFs revolves around YieldMax: Is an 83% yield too good to be true? Could these high-yield ETFs be the answer to your retirement planning gap? Let's find out.
YeildMax Background
As an ETF veteran, my first question was: What exactly is YieldMax? Their website’s “About Us” section offers little insight—just a list of corporate entities. However, a closer look at one key firm, Tidal Investments, reveals a leadership team primarily composed of former Global X ETF executives.
We generally view Global X ETFs favorably, as they tend to be well-structured and timely in ETF comparisons. Among major ETF providers, it’s no surprise to see BlackRock and Vanguard leading the pack. What’s notable, though, is Vanguard’s impressively low average ETF expense ratio—now under 10 basis points—while Charles Schwab isn’t far behind at 12 basis points.
Global X, ranking 15th in AUM with $57 billion, operates at an average expense ratio of 51 basis points, largely due to its mix of actively managed and hybrid ETFs. Meanwhile, Tidal Investments brands itself as "ETF Masters," boasting 193 ETFs and managing $30 billion in AUM. However, when we dig into the AUM of their own ETFs, YieldMax’s numbers raise further questions.
YieldMax ETF products
Looking at YieldMax’s ETF offerings in aggregate, they’ve amassed nearly $10 billion in AUM—roughly one-third of the total assets they manage. Notably, their top four ETFs are tied to highly volatile stocks.
A few numbers immediately stand out. First, the average expense ratio exceeds 100 basis points. Personally, I wouldn’t pay that much for any ETF—perhaps for alternative assets like startups, fine wine, or art, but otherwise, that’s a steep cost. Low fees are the strongest predictor of a fund’s long-term outperformance, making these expenses a red flag.
The second key data point is the one-year average return of their ETFs, which, of course, should be compared to an appropriate benchmark. However, the most striking figure is the average dividend yield—an eye-popping 48.45%.
That leads me to the single most important lesson I’ve learned in life—whether academically, professionally, or in relationships…
There is no such thing as a free lunch.
The saying “There’s no such thing as a free lunch” is believed to have originated from pubs that offered free snacks with beer—snacks deliberately high in salt to encourage patrons to order more drinks. This principle holds true in all aspects of life, as people often look for shortcuts, but the reality is, there aren’t any.
When evaluating any income-generating asset, the key question to ask is: Where is that income coming from? Any asset can claim to generate a 10% yield—you just sell 10% of it. This concept ties closely to the modern take on the 4% rule for sustainable retirement withdrawals, something we’ve discussed before.
With YieldMax, the reality is that they’re profiting regardless. Right now, they’re raking in around $100 million in fees, surpassing ARK’s $91 million. There’s no doubt YieldMax has built a highly successful ETF franchise—but that doesn’t necessarily mean their products are good investments.
Wall Street isn’t in the business of making you money. It’s in the business of generating transactions. And when you take a closer look…
How YieldMax works
YieldMax’s income ETFs, particularly those tied to individual stocks, generally follow one of two strategies: a standard covered call approach or an opportunistic credit call spread strategy. We won’t get into the complexities of options-based synthetic exposure, but YieldMax provides a helpful table in their collateral outlining when these ETFs are expected to outperform or underperform their underlying stocks.
According to them, their ETFs should outperform in scenarios of slow share price growth or decline. However, when a stock experiences significant price appreciation—like many of the names they track—they anticipate substantial underperformance, which is exactly what’s happening now. They also claim that in low-volatility environments with gradual share price increases, their ETFs will outperform. But if that’s the case, why not just start with low-volatility stocks in the first place? Simple—because that’s not what attracts retail investors chasing high yields.
Another key point: income from these ETFs declines in low-volatility periods. That directly contradicts their claim about performing well during slow, steady stock growth. Ultimately, it doesn’t matter to YieldMax whether these products outperform or underperform—their fees get paid either way.
Historically, stocks as an asset class have appreciated around 9% per year. Trying to generate alpha by selectively capturing short-term underperformance is a risky bet. If downside protection is the goal, diversification across asset classes—like what Vanguard offers for under 10 basis points—is a far more reliable strategy. And as we’ve said before, low fees are the biggest predictor of long-term performance.
Take, for example, the YieldMax NVDA Option Income Strategy ETF. Despite its name, it does not directly invest in Nvidia stock. Many investors drawn to these products likely don’t realize what they’re actually buying. The fund’s strategy explicitly states that it caps potential gains if Nvidia’s stock rises, while still exposing investors to full losses if the stock declines. That’s not exactly a favorable trade-off.
Additionally, investors in this ETF aren’t entitled to Nvidia’s dividends—though that’s expected since this is a synthetic strategy. But this highlights a key point: these products function very differently from traditional dividend-paying stocks, and investors should be fully aware of the trade-offs before jumping in.
YieldMax ETF performance
When you look at the payments page, this is where yield chasers start getting excited. But when evaluating any investment, we need to focus on total return—not just the income an asset generates but also its price appreciation (or depreciation) over time.
For the YieldMax Nvidia strategy ETF, the available performance history only dates back to May 2023. Since then, the ETF has declined by 8.45%. To get a full picture, we need to factor in both this loss and the income distributions to see how it compares to its benchmark—Nvidia itself.
While short-term performance isn't everything, this ETF is designed to underperform Nvidia in periods of strong stock appreciation. And that’s exactly what’s happening.
Looking at the income distributions, they’re highly inconsistent. If you're relying on this asset for income, be prepared for significant volatility. Doing some quick back-of-the-envelope math:
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Starting price: ~$20
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Ending price: ~$18
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Total dividends paid: $26.30
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Total return: 123%
However, this doesn't align with the cumulative performance numbers reported by YieldMax, which show 164% monthly and 205% quarterly—likely due to dividend reinvestment calculations. But even if we take their figures at face value, it’s irrelevant because Nvidia’s own return over the same period was 312%. Simply holding Nvidia stock would have been far more profitable.
And that’s by design—this ETF is built to underperform the underlying stock. No justification can offset the 1% expense ratio investors are paying for this structure.
Investment Risk YieldMax ETFs
This is an actively managed fund that generates monthly income by selling (writing) call options on Nvidia. But as we’ve covered before, actively managed funds rarely beat their benchmarks—95% of active managers underperform over the long run, according to a study by S&P Global.
YieldMax explicitly states that this ETF limits your participation in Nvidia’s price gains. Why would I want to cap upside potential in a high-growth stock? That makes no sense. If you believe in Nvidia, you’re far better off just owning the stock outright.
Even more concerning is this statement from YieldMax: "ETF distributions may contain a return of capital, but an estimate cannot be provided at this time."
Translation: They could be handing back your own money, deducting a 1% fee in the process, and calling it a yield. And what happens when Nvidia’s volatility drops? That income stream could shrink significantly.
Total return is what matters. Selling call options on a stock you’re bullish on is a bad strategy. Trying to time market corrections is pure speculation. Quality stocks should be bought when they decline, not capped when they rise.
If you’re bearish on Nvidia, there are better ways to play that thesis. But if your bear case is based on valuation timing, remember that market timing almost never works consistently. The limited performance data for this ETF already confirms that simply holding Nvidia would have been a better choice.
Many investors will see "48% yield" and assume they can earn massive income while holding Nvidia. That’s the kind of misleading thinking that instant analysts push. But when you analyze YieldMax’s full ETF lineup, it becomes clear—these funds are designed to underperform their underlying assets.
Take their biggest four ETFs—MicroStrategy, Nvidia, Tesla, and Coinbase—all structured as option income strategies. Every single one is built to lag behind its respective stock. And then there are their fund-of-funds, layering an additional 1.28% in fees on top of the already expensive ETFs underneath.
YieldMax has done an incredible job attracting AUM, but that doesn’t mean their products are good investments. Welcome to Wall Street.
Conclusion
Don’t waste time trying to rationalize these products. Some investors will insist they’ve found a "free lunch" and will argue against reality. But as the saying goes, there’s a sucker born every minute.
Paying an active manager 1% in fees is one of the most common (and costly) mistakes investors make. Active management has been in decline for years, yet firms like YieldMax continue to convince people to pay high fees for products that can’t beat the market.
Wealth-building is slow, steady, and predictable. Stop looking for shortcuts, and you’ll reach your financial goals much faster. The earlier you start investing wisely, the more money you’ll have in retirement.
Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.
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