A one-versus-one dogfight is one of the most challenging types of flights. This type of mission pits one pilot’s skills against his opponent. This air combat training that I received when I was a fighter pilot was not the type of mission where you wanted to come home second best.
Single stock covered-call ETFs have become immensely popular with retail and institutional traders. For many of them, there are now two sponsors offering competing funds covering the same underlying stocks. And while this type of ETF is new in, with the oldest funds operating for over a year, the funds have been trading long enough to compare returns for covered call ETFs with the same underlying stock.
This is the fourth comparison article in my current series. You can find the previous ones here.
This week we compare the two Microsoft Corp. (MSFT) covered call ETF returns since November 1, 2023.
The current quoted yield for the YieldMax MSFT Option Income Strategy ETF (MSFO) is 26.47%. Since November 1, 2023, the MSFO share price has declined by 10.1%. With the covered call strategy dividends, the MSFO total return jumps to a positive 19.3%. MSFT has performed well over the last year, up 30%. The YieldMax strategy for MSFT performed as expected, providing an attractive yield, but not capturing all of the underlying stock gains.
The Kurv Yield Premium Strategy Microsoft (MSFT) ETF (MSFY) shows a current distribution rate of 15.78%—about half the current yield quote for MSFO. From November 1 of last year through October 2, MSFY’s share price gained 1.6%. Over the period, including the dividends, MSFY put up a total return of 13.81%. MSFY posted a level share price, and a total return that closely matches the dividend yield. Investors in MSFY did not participate in any of the MSFT gains.
The differences between the MSFO and MSFY returns are telling. The MSFO share price decline was more than offset by the higher dividend yield, giving the YieldMax ETF the win in this comparison.
This is the fourth comparison out of the six Kurv covered call ETFs. The first two, with AMZN and AAPL were basically ties. The Kurv ETF has the clear winner between the two GOOGL covered call funds. Check back next week for the latest installment of this series.
I will also track comparisons over the longer term. That information will be shared with subscribers of my ETF Income Edge service.
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