Dogfight: Netflix Covered-Call ETFs One v. One

ETFs, Investing Strategies

During my time as a fighter pilot, a one-versus-one dogfight was one of the most challenging types of flights. This type of mission pitted one pilot’s skills against his opponent. This air combat training was not the type of flight in which you wanted to come home second best.

The new category of single stock covered-call ETFs now has two sponsors offering competing funds covering the same underlying stocks. This type of ETF is new in the market, with the oldest funds operating for just over a year. Many have track records that are only a few months in length.

The funds have been trading long enough to compare returns for covered-call ETFs with the same underlying stock. This week I want to compare the two Netflix Inc. (NFLX) covered-call ETF returns since November 1, 2023.

The YieldMax ETFs were the first mover with this type of ETF, launching their first funds in November 2022. Currently, YieldMax offers 19 single-stock ETFs, with more on the way. These funds have caught the attention of investors with eye-popping distribution yields.

The six Kurv single-stock covered-call ETFs launched at the end of October 2023. These funds have lower distribution yields, but the stock price charts for the last four-plus months have very positive slopes.

With at least a few months of track records, I want to compare the returns of the YieldMax and Kurv funds covering the same stocks.

The current quoted yield for the YieldMax NFLX Option Income Strategy ETF (NFLY) is 57.14%. Since November 1, the NFLY share price was basically flat, dropping by 1.3%. NFLX gained 34.0% over the same period. NFLY paid $4.83 in dividends to add 27.0% to the starting share price. A little math gives a total return of 25.7% since November 1. MSFT shares outperformed the YieldMax MSFT covered-call ETF, but the covered-call strategy posted a decent return for the period.

The Kurv Yield Premium Strategy Netflix (NFLX) ETF (NFLP) shows a current distribution rate of 17.53%. That’s almost 70% less than the current yield quote for NFLY. From November 1 through April 29, the NFLP share price gained 13.9%. Over the time period, NFLP paid $2.55 in dividends. The dividends earned add 10.0% to the initial share value, giving a total return of 23.9%.

Although it is apparent from the distribution yields, the two fund sponsors take different paths to picking call options strike prices, the total returns for the period in question are quite close. I have now written up five of these ETF dogfights and there have been three ties, one clear Kurv win, and one clear YieldMax win.

I will do the same calculations for the remaining Kurv fund against their YieldMax counterparts over the next few weeks and publish my findings here.

I will also track comparisons over the longer term. That information will be shared with subscribers of my ETF Income Edge service. Click the link below to join!

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