Wish I Was Making This Up
An ETF gains 42% a year; its investors still lose money.
YieldMax COIN Option Income Strategy ETF gained 41.9% per year from its Aug. 14, 2023 inception through Apr. 30, 2025.
Over that period, the ETF received nearly $2 billion in cumulative net inflows and its daily assets averaged around $560 million.
How much money did investors in this ETF make in dollar terms over this period? They didn’t make any money. They lost money. $35.5 million in total.
That might sound improbable, but you don’t have to take my word for it: It’s what YieldMax reported in the ETFs’ financial statements for the fiscal years ended Oct. 31, 2023 (+$3.6M), Oct. 31, 2024 (-$2.4M), and the six months ended Apr. 30, 2025 (-$36.7M). You can find screenshots of the relevant sections of those reports below.
How do investors lose $35 million in an ETF that’s gained nearly 42% per year? By mis-timing their investments. Exquisitely.
The ETF surged to an 81% gain from Oct. 1 to Dec. 31, 2023. That drew investors, who pumped over $190 million into the ETF from Dec. 15, 2023 to Jan. 15, 2024. But that demand spike more-or-less coincided with a 20%-plus loss in Jan. 2024. That drawdown spurred $23 million in outflows in Feb. and Mar. 2024, during which the ETF gained 65%.
Investors responded by pouring another $700 million into the ETF over the ensuing six months ended Sept. 30, 2024. But that once again came just as the ETF’s performance was moderating – it slid to a 26% loss from Apr. to Sept. 2024. (I’ve encircled the periods in question in the following chart.)
Similarly, from mid-Nov. 2024 to mid-Mar. 2025, investors shoveled another $730 million into the ETF amid resurgent returns, as the ETF rose nearly 48% from Nov. 2024 through Jan. 2025. But once again that was a prelude to deteriorating performance – the ETF lost 14%, 21%, and 18% in Dec. 2024, Feb. 2025, and Mar. 2025, respectively.
We don’t have reported information from YieldMax for the period since Apr. 30, 2025. As such, there’s no way to definitively know whether shareholders have gotten back in the black again. What we do know is the ETF has notched additional gains (nearly 22% through Aug. 31, 2025) and gotten even more inflows ($555M cumulatively).
But, big picture, you’re talking about an ETF that had seen around $2.5 billion in lifetime net inflows through Aug. 31, 2025; which had gained around 48% per year over that span; and, despite that, finished August with just $1.4 billion in net assets. How is that possible?
When you take investors’ errant timing together with the manager’s modus operandi of making huge distributions, it’s sapped the asset base’s compounding power. I’ve got a longer article in the works that will go into this, but the ETF’s earnings haven’t been sufficient to fund the distributions. To plug the hole, the manager has returned capital, again and again. (You can see that in the screenshots I included above; under ‘Distributions to Shareholders’ where it says ‘Return of Capital’.)
This has likely had a pernicious effect: Investors pile in at the wrong time, just as returns are starting to roll over. Those depressed investments could recoup those losses and make gains, but because the ETF pushes out so much capital—in order to uphold the pretense of making huge distributions—it arrests compounding. That kneecaps the ETF’s ability to compound the earnings it needs to fund those payouts, leaving investors with losses in dollar terms, even as the ETF makes huge gains.
Wish I was making this up.
The views and opinions expressed in this blog post are those of Jeffrey Ptak and do not necessarily reflect those of Morningstar Research Services or its affiliates.
Amazing. I'm pretty sure there's a term for a fund that uses new investment inflows to pay out obligations to existing investors.