Understanding the YIELDMAX(R) GOOGL OPTION INCOME STRATEGY ETF (GOOY)

What this ETF is trying to do

The YIELDMAX(R) GOOGL OPTION INCOME STRATEGY ETF (GOOY) is a type of fund known as a single-stock ETF. It uses an option income strategy to try and generate cash for its investors. This means it focuses on creating regular payments rather than just following the stock market's movements.

What the numbers show

When looking at this ETF, it is important to understand that price return and total return are two different things.

• Price Return: This measures only the change in the share price. For GOOY, the share price has gone down over different periods. The year-to-date (YTD) price return is approximately -16.30%, and the one-year price return is approximately -16.07%. Over three years, the price return was approximately -37.78%.

• Total Return: This measures the overall performance, including the cash payments (distributions) sent to investors. Even though the share price fell, the total return was positive because of the cash payments. The YTD total return was approximately 10.98%, the one-year total return was approximately 31.85%, and the three-year total return was approximately 90.77%.

To visualize this, the estimated price from roughly one year ago was $14.56, while the current price is $12.22.

Income and distribution explanation

This ETF is designed to provide frequent cash payments. The distribution yield is approximately 52.17%. This is a very high percentage, but it is important to remember that a high yield does not guarantee the investment will grow in value.

The fund has been very active with payments, making approximately 50 distributions over the last 12 months. These payments are frequent and often occur on Thursdays.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases over time. While a falling share price does not always mean the NAV is eroding, StockValueFinder uses an erosion-risk score to measure this risk.

GOOY has an erosion score of 55, which is labeled as "Moderate price erosion." This means there has been a moderate trend of the share price declining.

Pros

• High Cash Flow: The fund offers a very high distribution yield for those looking for frequent cash payments.

• Positive Total Returns: Despite the falling share price, the total return (which includes the cash payments) has been positive over the last year and three years.

Cons

• Share-Price Decline: The actual price of a single share has decreased over the one-year and three-year periods.

• Moderate Erosion Risk: The fund shows a moderate level of price erosion according to its risk score.

Beginner takeaway

For new investors, the most important lesson here is that high yields can be misleading. An ETF might pay out a lot of cash (high distribution yield), but if the share price is falling at the same time, the total value of your investment might behave differently than you expect. Always look at both the price return and the total return to see the full picture.