{"id":554,"date":"2025-04-14T15:05:09","date_gmt":"2025-04-14T15:05:09","guid":{"rendered":"http:\/\/www.pacific-hydro.com\/?p=554"},"modified":"2025-04-18T23:02:04","modified_gmt":"2025-04-18T23:02:04","slug":"what-is-a-high-yield-etf","status":"publish","type":"post","link":"http:\/\/www.pacific-hydro.com\/index.php\/2025\/04\/14\/what-is-a-high-yield-etf\/","title":{"rendered":"What Is a High Yield ETF?"},"content":{"rendered":"

A Performance-Based Look at MSTY vs. MSTR Over the Past Year<\/strong><\/h2>\n

As income-focused investors look for ways to generate higher returns in a volatile market, the question often arises: What is a high yield ETF, and how does it compare to owning individual stocks?<\/strong> One category gaining attention is option income ETFs<\/strong> \u2014 particularly the YieldMax suite<\/strong>, which includes ETFs like MSTY<\/strong>, based on MicroStrategy (MSTR).<\/p>\n

In this article, we\u2019ll examine what high yield ETFs are, how the YieldMax strategy works, and how MSTY has performed over the last year compared to directly holding MSTR stock. The goal is to understand the trade-offs between high monthly income and total return, especially in a year marked by market volatility.<\/p>\n

Understanding High Yield ETFs<\/h2>\n

A high yield ETF<\/strong> is an exchange-traded fund that prioritizes income generation, typically offering annualized yields that far exceed those of traditional dividend-paying funds. These ETFs may invest in high-yield corporate bonds, preferred stocks, or, in the case of YieldMax ETFs, use options-based strategies<\/strong> to enhance income.<\/p>\n

YieldMax ETFs do not own the underlying stocks directly. Instead, they use derivatives to simulate long exposure to a stock and then generate income by systematically selling call options<\/strong>. This strategy produces steady monthly cash flow but limits upside participation if the stock rises sharply.<\/p>\n

The Strategy Behind MSTY<\/h2>\n

MSTY<\/strong>, the YieldMax MSTR Option Income Strategy ETF, is designed to deliver income by writing call options on a synthetic long position in MicroStrategy (MSTR)<\/strong>. This approach enables the fund to:<\/p>\n