The YieldMax Ultra Option Income Strategy ETF (ULTY) now carries a sell rating amid ongoing net asset value (NAV) erosion and distributions that remain unsustainable.
Revised Strategy Fails to Deliver
ULTY recently adjusted its approach by allocating up to 50% of its portfolio to lower-volatility, large-cap equities. However, this change has not stemmed the NAV decline or improved the viability of its payouts.
While the fund generates substantial option premiums, the net gains realized after closing trades fall short of supporting its double-digit yields.
Increased Overlap Reduces Diversification
Portfolio holdings now show greater alignment with major market indices, diminishing the benefits of diversification. Compounding these issues, elevated expense ratios continue to pressure performance.
Investment Recommendation
Initial evaluations positioned ULTY as a modest yield booster in limited allocations. Current analysis, however, reveals unresolved structural weaknesses, justifying the downgrade to sell.
