QYLD questions

[knucklehead 61]

I have a small amount of $ in QYLD for the last 6 months, roughly 32k.
It pays 11.8% in annual dividends (paid monthly)
seems solid to me, but surely there is a catch I am missing.
any others here own a position in QYLD & care to offer their thoughts, either good or bad?

 

[Rowej]

If you would like to know more about the returns and risks of QYLD versus other Income funds, Gerry has a “GW Retire with Less Channel” on YouTube has done a lot of research and shares his thoughts on them. You can check out one, using this link. He has many others comparisons as well. Here is a link to one of them.
https://youtu.be/x2Mx4DFsat0

 

[SecondAttempt]

I have a small amount of $ in QYLD for the last 6 months, roughly 32k.
It pays 11.8% in annual dividends (paid monthly)
seems solid to me, but surely there is a catch I am missing.
any others here own a position in QYLD & care to offer their thoughts, either good or bad?

I only recently learned about QYLD on this forum. I have been researching it but am not an expert. I plan to buy a position a little less than yours on a dip.

This fund has long positions in Nasdaq 100 stocks so you are exposed to losses if the Nasdaq goes down. The Nasdaq has had an amazing run recently so factor that in. As with any covered call writing you are giving up potential future gains from price appreciation in exchange for income from the calls.

From my perspective I don't expect the Nasdaq to crash nor to I expect it to continue its strong run up so QYLD is well suited to me. If you expect the Nasdaq to skyrocket then QQQ might be a better investment. If you think the Nasdaq will fall, QYLD is probably not for you.

There are people on E-R with a lot more expertise on this than me. If I am wrong I hope someone corrects me.

 

[jim584672]

QYLD has lower total returns than VTI, plus the expense ratio is 0.60% vs. 0.03% for VTI. I honestly don't know why this fund gets so much hype, it is garbage. Just buy QQQ and write some calls yourself if you want the fund's strategy.

 

[robls]

QYLD has lower total returns than VTI, plus the expense ratio is 0.60% vs. 0.03% for VTI. I honestly don't know why this fund gets so much hype, it is garbage. Just buy QQQ and write some calls yourself if you want the fund's strategy.

Or just do 50% QQQ and 50% QYLD. Cuts the distribution in half, but get the upside of QQQ.

 

[jim584672]

Or just do 50% QQQ and 50% QYLD. Cuts the distribution in half, but get the upside of QQQ.

Better yet, just avoid it. Total return is the only thing that matters.

 

[ERD50]

.... From my perspective I don't expect the Nasdaq to crash ....

QQQ has experienced a horrific crash in the past. Set the slider back to March 2000 to Oct 2002. An 80% drop!!!!

https://stockcharts.com/freecharts/perf.php?SPY,qqq

.... There are people on E-R with a lot more expertise on this than me. If I am wrong I hope someone corrects me.

What's the attraction to QYLD? Set the slider to "ALL", QYLD badly under-performs the broad market, and is still quite volatile.

https://tinyurl.com/yzf57yuu <<< www.portfoliovisualizer.com

Portfolio	Initial Balance	Final Balance	CAGR	Stdev
VTI-Total Market	$100,000	$266,691	13.49%	14.28%
QQQ	$100,000	$437,093	20.96%	16.17%
QYLD	$100,000	$187,609	8.46%	10.66%

A 60/40 VTI/BND still beats QYLD, and has lower volatility.

Portfolio	Initial Balance	Final Balance	CAGR	Stdev
60/40	$100,000	$211,970	10.18%	9.66%
QYLD	$100,000	$187,609	8.46%	10.66%

What's the attraction to QYLD?

ERD50

 

[ERD50]

And if you really are hooked on QQQ, a 50/50 blend of QQQ/BND provides better returns and lower volatility than QYLD. And is likely more tax efficient as well, if that matters.

At the (100%!) risk of repeating myself, again: "What's the attraction to QYLD?".

Portfolio	Initial Balance	Final Balance	CAGR	Stdev
QQQ	$100,000	$437,093	20.96%	16.17%
QQQ/BND 50/50	$100,000	$283,490	14.39%	10.51%
QYLD	$100,000	$187,609	8.46%	10.66%

-ERD50

 

[robls]

I have a small amount of $ in QYLD for the last 6 months, roughly 32k.

^^^^The key quote in the original post. Maybe he sells out of QYLD and puts its into QQQ. No biggie.

 

[ERD50]

If you would like to know more about the returns and risks of QYLD versus other Income funds, Gerry has a “GW Retire with Less Channel” on YouTube has done a lot of research and shares his thoughts on them. You can check out one, using this link. He has many others comparisons as well. Here is a link to one of them.
https://youtu.be/x2Mx4DFsat0

Not much of a comparison. He gets to QYLD at ~ 9 minute mark. Just a six-month review, which is not very informative.

-ERD50

 

[olyveoil]

QYLD has lower total returns than VTI, plus the expense ratio is 0.60% vs. 0.03% for VTI. I honestly don't know why this fund gets so much hype, it is garbage. Just buy QQQ and write some calls yourself if you want the fund's strategy.

I honestly don't know why people want to or try to compare QYLD with VTI. Apples and bowling balls.

 

[ERD50]

I honestly don't know why people want to or try to compare QYLD with VTI. Apples and bowling balls.

Because money = money.

-ERD50

 

[olyveoil]

Because money = money.

-ERD50

So everyone's investment goals and objectives are the same? Everyone has the same plans/needs? Everyone's outlook means that anything(and I mean A-NY-thing) should be compared to VTI?

The broken recordness on here of comparing anything/everything to VTI is....welll....intellectually lazy.
Because lazy = lazy.

 

[braumeister]

<Mod Note>
Easy to forget, because we have so many indexers here, but this is the Active Investing forum so such comparisons are really off limits here. Thanks for understanding.

 

[gauss]

QYLD has lower total returns than VTI, plus the expense ratio is 0.60% vs. 0.03% for VTI. I honestly don't know why this fund gets so much hype, it is garbage. Just buy QQQ and write some calls yourself if you want the fund's strategy.

Most of QYLDs distributions are NOT from call writing income, but rather a "return of capital".

The correct analogy would thus be to write a call AND sell about 1% of the QQQ shares each month

-gauss

 

[olyveoil]

<Mod Note>
Easy to forget, because we have so many indexers here, but this is the Active Investing forum so such comparisons are really off limits here. Thanks for understanding.

I don't really have a problem with comparisons. Relevant ones.
VTI is apples and QYLD is bowling balls. The comparison is silly at best.

 

[ERD50]

<Mod Note>
Easy to forget, because we have so many indexers here, but this is the Active Investing forum so such comparisons are really off limits here. Thanks for understanding.

OK, thanks. I guess because QYLD is a play on the index QQQ, I was thinking comparisons to the QQQ index were OK (as I did in my post #8). I guess it was a bit of a sidetrack to compare to VTI/Bonds, but it seemed like a natural progression, but I'll drop that line.

-ERD50

 

[ERD50]

I don't really have a problem with comparisons. Relevant ones.
VTI is apples and QYLD is bowling balls. The comparison is silly at best.

OK, forget about VTI then. As I showed in post #8, QYLD doesn't seem to get you anything over a blend of QQQ and BND. The 50/50 blend of QQQ/BND provides better returns and lower volatility than QYLD.

So what's to like about QYLD? I dug up the data and presented it here, that's hardly 'lazy'.

-ERD50

 

[SecondAttempt]

QQQ has experienced a horrific crash in the past. Set the slider back to March 2000 to Oct 2002. An 80% drop!!!!

https://stockcharts.com/freecharts/perf.php?SPY,qqq


ERD50

I meant I don't expect the Nasdaq to crash anytime soon. I don't see a dotcom bust coming which is what you showed.

The rest of your post about QYLD I still need to investigate. Like I said, I just learned of its existence recently. It seems to be something that will do well in a sideways market but will underperform in rising and falling markets. Does that seem reasonable? We have had a decent runup fueled by the end of the pandemic. I expect some sideways movement for a while until balance is restore in the world economy and trading systems.

 

[jim584672]

5 year total return - QQQ - 239.17%
5 year total return -QYLD - 68.94%

QYLD is a dog with fleas.

Source stockcharts.com, performance.

 

[ERD50]

I meant I don't expect the Nasdaq to crash anytime soon. I don't see a dotcom bust coming which is what you showed.

The rest of your post about QYLD I still need to investigate. Like I said, I just learned of its existence recently. It seems to be something that will do well in a sideways market but will underperform in rising and falling markets. Does that seem reasonable? We have had a decent runup fueled by the end of the pandemic. I expect some sideways movement for a while until balance is restore in the world economy and trading systems.

It does seem reasonable for a covered call strategy. But the devil's in the details, and the proof of the pudding is in the tasting.

So even though the underlying investment might move sideways in general, that can still have ups/downs month to month (that mostly net out, so looks sideways), and often end the call period with highs that cap the gains, and lows that exceed the call premium.

Now for the pudding - here's that chart again. Set the slider (right click the bar) and set to 'past year', which will be 253 trading days. Now grab the bar and slide it back/forth. It (almost?) never exceeds the return of the underlying QQQ, and as other data has shown, doesn't reduce volatility enough to compensate for its under-performance. You can do the same for a two year period by entering 506 days in that bar.

https://stockcharts.com/freecharts/perf.php?QQQ,QYLD

NOTE: - since QYLD is a covered call play on QQQ, I think the references here to QQQ are relevant, and not against the tone of this sub-forum which is to not compare every stock pick to an index and talk down stock picking.

The only reason I can think of for someone to invest in QYLD versus QQQ direct is that they expect it to fill some other need. For example, if it provided decent returns with lower volatility than you could get with a simple bond mix, that would seem to be a reasonable goal. But QYLD has delivered lower returns and higher volatility, so it really does not seem to have any place in any portfolio, that I can see.

But maybe I missed something. Does anyone hear see a reason to invest in QYLD?

-ERD50

 

[olyveoil]

OK, forget about VTI then. As I showed in post #8, QYLD doesn't seem to get you anything over a blend of QQQ and BND. The 50/50 blend of QQQ/BND provides better returns and lower volatility than QYLD.

So what's to like about QYLD? I dug up the data and presented it here, that's hardly 'lazy'.

-ERD50

1.) then don't buy QYLD
2.) comparing every active investment to VTI is lazy
3.) QYLD is a new offering. It is not supposed to replace VTI nor QQQ.
4.) I have 8% of my portfolio already in Bonds, 5% in cash (used to be 10%). I took half of my cash and put in QYLD, NUSI, JEPI, RYLD.
Since, I have gotten monthly dividends while my principal has grown slightly. I never ha any intention of trying to beat QQQ or VTI with that part of my portfolio. THAT is the point. This never-ending comparison of anything and everything to VTI is tedious.
I took half my cash and took a risk.

What you don't see me doing is trying to make some absurd argument of comparing QYLD to cash, because it would be....well....absurd.

 

[olyveoil]

5 year total return - QQQ - 239.17%
5 year total return -QYLD - 68.94%

QYLD is a dog with fleas.

Source stockcharts.com, performance.

Irrelevant comparison.

Source -- Me. Or anyone with different goals than being 100% invested in QQQ.
Do YOU have everything invested in QQQ?

 

[olyveoil]

It does seem reasonable for a covered call strategy. But the devil's in the details, and the proof of the pudding is in the tasting.

So even though the underlying investment might move sideways in general, that can still have ups/downs month to month (that mostly net out, so looks sideways), and often end the call period with highs that cap the gains, and lows that exceed the call premium.

Now for the pudding - here's that chart again. Set the slider (right click the bar) and set to 'past year', which will be 253 trading days. Now grab the bar and slide it back/forth. It (almost?) never exceeds the return of the underlying QQQ, and as other data has shown, doesn't reduce volatility enough to compensate for its under-performance. You can do the same for a two year period by entering 506 days in that bar.

https://stockcharts.com/freecharts/perf.php?QQQ,QYLD

NOTE: - since QYLD is a covered call play on QQQ, I think the references here to QQQ are relevant, and not against the tone of this sub-forum which is to not compare every stock pick to an index and talk down stock picking.

The only reason I can think of for someone to invest in QYLD versus QQQ direct is that they expect it to fill some other need. For example, if it provided decent returns with lower volatility than you could get with a simple bond mix, that would seem to be a reasonable goal. But QYLD has delivered lower returns and higher volatility, so it really does not seem to have any place in any portfolio, that I can see.

But maybe I missed something. Does anyone hear see a reason to invest in QYLD?

-ERD50

Broken record.

 

[ERD50]

Irrelevant comparison.

Source -- Me. Or anyone with different goals than being 100% invested in QQQ.
Do YOU have everything invested in QQQ?

Broken record.

I understand people will have different goals, different risk tolerances, etc. But you have not told us what it is you are trying to achieve with QYLD.

This isn't about being 100% invested in anything, not sure why you bring that up. But every investor should be comparing the alternatives within their allocation, be it equities, fixed income, or cash.

If I'm looking into an equity, I compare it to equities, fixed to fixed, cash to cash. If I'm looking at something that is a hybrid, then I compare it to some blend. If that blend doesn't provide a risk adjusted return, then I'm not going to bother.

-ERD50