Defiance ETFs UPDATE: QQQY JEPY | Q&A w/Jay - Part 2 of 3

[@PassiveIncomeInvesting]

Wow, still a lot of nonsense comments from people who still don;t "get it" . That's ok , used to it. Ill just say this: JEPY is OUTPERFORMING SPYI and JEPI since JEPYs inception and as of May 20th . I cannot say the same for QQQY unfortunately vs JEPQ but hopefully this statement will make you reflect a little and prompt you to try and understand how these Funds work instead of coming up with nonsense statements relating to stock charts etc. P.S. plenty of other videos where i discuss these ETFs

[@whistlerbrad]

Total return on Seeking Alpha, JEPY is *not* outperforming JEPI or SPY. Total return includes reinvesting the distributions. YTD: JEPY is 5.49%, JEPI is 6.52%, SPY is 11.82%. As Jay says, it's not a total return product; it's harvesting volatility. So do what you want with that, but you won't outperform the index. This also affects your performance in DRIP. Without reinvesting the dividends, the YTD performance is: JEPI is (-8.76%), JEPI is 4.15%, SPY is 11.47%.

[@fsabeti]

when qqqy and jepy pay dividends, the price of etf drops the same amount, that not normal.

[@LivingonHighYield]

Adrian, just curious why you don’t Hold any IWMY? Its the highest yield and provides some diversification from the other indexes. And you get your ROI the fastest. Debating to add some of that strictly as a compounding machine part to my portfolio which I have core positions in QDTE, YMAX, SPYT, XDTE

[@SomeUserNameBlahBlah]

JEPY has been dropping. What's the point of DRIPping if you spend nothing and break even. If your dividend is just paying your loss in principle, then you gained nothing.

[@g.ajemian4968]

If you always have to drip the dividends to avoid losing your shirt what is the benefit for a retiriere looking to live off dividends

[@DrKiwi-jz6wh]

You don’t have to reinvest all. I will say 25 to 30 percent to start with. If your living expense won’t change that much , with huge distribution, you will very soon to reinvesting more than half distributions. Compound interest will surprise you and you can eventually increase your living expense too. Been retired with these high yield fund for year now and pretty comfortable. Reinvesting about 50 percent or more now but started with 25 percent.

[@keithcring8011]

Wheel method with info and insight. A static drip is uninformed and far less effective.

[@randalxu4889]

Yes, the power of compounding! ✊ Thanks to the high yield from QQQY and JEPY, the compounding effect can be sizeable in a relative short period of time. Those who understand it -- EARN it. Those who don't -- PAY IT! Thanks Adrian!

[@joloui2035]

on the erosion, people expect the capital invested to be able to AT LEAST sustain itself over time without reinvesting its distribution. What is the worth of a distribution if it needs to go back so the initial capital doesnt tank? We all want a nice distribution but having to necessarily put some back so the initial capital doesnt go down is something most investors dont want to have to do. To me it doesnt make any sense. Pretty much Its like having someone paying u rent, and getting the rent money and a brick :) hey dont forget to put back the brick now!

[@thedarkknight2329]

You make an excellent point which further emphasizes this investment might not be for you. The outsized distribution makes it easy to allocate a portion back into the fund. Extract what you need, reinvest the rest.

[@carloscouto3832]

With the high distributions your portfolio value and share count will compound much faster than a lower yielding fund. Get it to a point where its large enough to live off half and reinvest the rest. So your share count keeps going up

[@joloui2035]

@@carloscouto3832 what mattters is total return, my point remains, u need to put back some of the high distribution so your initial investment doesnt tank, which is not good for an investment. At least for me, i dont want to have to do that.

[@napoleonmdusa8877]

It's not an "income" type stock if one has to reinvest 88-96% of the dividend paid out, plus (if in a taxable account) having to pay taxes on 100% of the dividend paid out. I would call this a "growth" type stock since you really can't use most of the dividend for real income to live off of. Only being able to receive 4-12% of the dividend (but possibly pay taxes on the entire dividend earned) makes it less attractive due to the reinvestment that's necessary to keep its value at or above what was paid for it. Also, at some point, taking into account the dividend earned (positive) and NAV drop (negative) to get a "net" dividend earned (still positive, hopefully), one might realize that another stock (maybe SVOL at ~16% annual yield) would produce a bigger "net" dividend. This is why I moved out of IWMY, evaluating the NAV drops and dividends earned each month, there are better stocks out there that end up paying a better "net" dividend which I need for income for living.

[@LivingonHighYield]

Ok so then buy QQQ and sell 5% of your shares each month as distributions you will need to pay short term capital gains on it. At least on these funds they can classify a chunk of the distribution as ROC so you don’t pay tax on that due to the 60/40 rules using options on CBOE

[@LivingonHighYield]

I think what would help the people not understanding the nav erosion debacle is if you compared the price return YTD between QQQY (-14.88% but you have received approx 25% in distributions) VS QQQ ( up 10% ) but now let’s take out 25% distribution essentially 5% per month, you would probably be worse off with QQQ as far as total value, if someone can put this together would be a great way to see how close the values of the 2 are and which one is actually on top?

[@climbergreg5011]

Reverse splits do matter, your investment value is the same at the day of the split... but after that your distributions decline, and the investment value starts to drop with the NAV drop. Ask anyone who owns TSLY if the distributions they are getting now, were anywhere close to what they were getting in November or December of 2023.

[@Returnofthejedi2000]

I also own Tsly and it’s true after the reverse split the distribution rate dropped…two ways to play the defiance etfs one buy your shares on the ex day and reinvest 75% of the dividend and hope for the best these investments are brand new…

[@PassiveIncomeInvesting]

you are wrong, they do not make a difference. its all in "proportion to the new NAV", the (the Amounts change but the Yields remain the same ) We discussed this in a previous Q&A. you will figure it out eventually.

[@Newtoinvesting]

@@PassiveIncomeInvestingSurely if an etf (like Tsly for example) has several reverse splits that has to be negative, no?

[@codetwoAJ]

Great vid. Thx! Can u do a more in-depth vid on the non-effect on yield when theres a reverse stock split using math and examples? Looking at QQQY stock price there will be an inevitable reverse stock split imo.

[@jacquesfournier4616]

Reverse stock split will raise the stock price and the dividend and lower the number of shares...so I think nothing will change, unless investors start selling their shares following the split! 😁

[@davdride4850]

Thanks Adriano. Wth you and jay esplaining these funds , more offten making it more easier to understand. Little hard headed lol. But I’m Getting it. Thanks

[@user-cg4pi5fi9u]

I totally get that QQQY is 'all about dividend' & would love to stick $5,000 into QQQY but even an idiot like me can work out that a continuation of the downward trajectory since launch of the 'NAV' or price, whatever you want to call it, means that by Sept 2025 the price will be zero, zilch, nada. It's there, staring us in the face. I cannot see any event that will stop this so what will happen when the price hits zero? Will the ETF fold or will it continue? This is not an unreasonable question which remains unanswered.

[@PassiveIncomeInvesting]

You still don’t get it … that’s fine , stick 5k In Something else

[@brianwraight4966]

Well said!

[@SomeUserNameBlahBlah]

@@PassiveIncomeInvesting He's asking a serious question. If someone does a full DRIP and a year later the stock/NAV is zero, then nothing was gained. If this is the #1 concern then you need to do a better job explaining it.

[@fireoptions]

@@SomeUserNameBlahBlah problem is that the owner of this channel doesn't get it

[@joannapatterson4625]

I’ve been buying a small amount of JEPY but focusing on SPYT. I think SPYT will be the winner over time.

If you compare Spyi and Tsly at the same page or any other page that compared dividend included or not, Spyi have won so far.

[@joannapatterson4625]

I’m not comparing SPYI and TSLY though.

[@jaypaladin-havesmartswilll5508]

Many of these high yield options ETFs need more time for anyone to make a solid judgement about them.

[@CC64YT]

The way i see these very high dividend paying ETFs like QQQY JEPY KLIP , once the received dividends cover your cost basis you don't really care what the price or NAV is. You've covered your cost the following years are pure profit. Am i missing something?

[@SummitMan165]

Excellent! Jay is THE man !!

[@dmitryrusak9729]

What is the point in West in QQQY? Yes, I get it, Nav. Erosion equals the amount you get in dividends, but you have to pay tax on those dividends, right? For me, this investment looks like I lend money to someone to use it and get nothing in return. There are many other less risky ETFs out there. One more, the low volatility downtrent in Nasdaq will eat up all investments in QQQY. This is what we might get after elections. Think about it

[@freeagent.87]

You don't get taxed on those dividends since they're RoC

[@jerrysims1370]

Income investor here, what happens when these funds reach 0$? Or is that not something to worry about

[@we9256]

I think you don't get why people complain about nav erosion. people invest in these funds and accept losing upside growth because they want to use the dividend as income.But if the way to play these funds is to drip the dividend why not just stick with the underlined stock because you get the growth.It' not that we don't get why the nave goes down but I think you don't get the people complaining about it

[@Yves-321]

i would love for for difiance to keep 5% and prevent fund erosion

[@PassiveIncomeInvesting]

it would have to be much more than that if you dont want to see a price decline, but whether they keep some or not, it makes no difference on the performance (returns)

[@RichardAkin-qj6xt]

I don't "DRIP" QQQY and IWMY, I actually BUY MORE SHARES than what the distributions would BUY in your ETF with "DRIP ON" during the month. My plan is "MANUAL OVER DRIPPING". The ETFs in my portfolio that have a low share price compared to the actual share price are the ones I use for "cash flow" or reinvesting other funds!

[@allbrainful]

Love Jay❤thanks for the update

[@jordonm24]

Have not even watch yet and already excited for this one.

[@DocFishNStocks]

yes, the ultimate concern of the NAV going down is the reverse split the might occur thus "removing" your share count thus limiting your future total distributions because the share count goes down?

[@ilkerbetoner]

Thats also what I was thinking, the fund manager promises -say %50 yearly income however as the Nav goes down %50 stays the same however the monthly div amount as well goes down.

[@carloscouto3832]

Thats why you reinvest so your share count keeps growing

[@DocFishNStocks]

@@carloscouto3832 I get that too. But what bothers me is the potential split that cuts your shares and the distribution amount stays more or less the same. you can't argue that having NAV appreciation, plus dividends off initial investment is better, no? There seem to be a number of funds that you could put your initial investment in and it would appear not need to reinvest the dividends and still be continue to be positive on the core investment.

[@naturalbornnerd3430]

What happens to the dividend payouts in a reverse split? My concern is, that even though your portfolio value stays the same, I now have less shares, which in turn means I would receive less of a total dividend payout each month. The whole purpose of investing in these funds is to DRIP and get more shares, which in turn gets a higher total dividend payout the next month. I plan to eventually live off part of the dividends received. Now I need to expect a pay cut each year or so? This worries me.

[@joannapatterson4625]

The first reverse split for any of these types of funds make no difference. Nothing really changes. A second reverse split will make a difference if there is one because that means even fewer shares. Everyone should have a core portfolio that is not these high yield funds, in my opinion. Also, you should plan to re-invest a portion of your income every month.

[@dkyrtata6688]

If there is a reverse split you will have half as many shares but each share will pay twice as much. No different than when you slice a cake 4 ways instead of 8. Each slice will have twice the number of calories. The number of slices cannot change the number of calories from the original size of the whole cake. However, the number of calories are fewer if the cake is smaller to begin with. Perhaps that's the reason why the number of slices is being altered.

[@mom2collegekids26]

@@dkyrtata6688I dont think that happened when TSLY reverse split

[@mom2collegekids26]

@@joannapatterson4625??? Fewer shares even with first reverse split

[@naturalbornnerd3430]

@@joannapatterson4625 I do have a mix of other, "safer" funds, but JEPY and QQQY are by far my largest holdings as I have been holding them the longest. My plan was to DRIP until close to retirement (hopefully earlier) and later use a large portion of these funds payouts to fund my other holdings and then live off of the other funds payouts during retirement.

[@CC64YT]

Okay guys. Jay pointed to this but i think Adriano you should post a video comparing normal charts of QQQY or some other high div etf versus an Adjusted for Dividend Chart. People will get that. I would post links to my TradingView charts but it seems we can't paste links in the chat.

[@JS-hc3tr]

I really like Jay and a lot of the Yieldmax funds. These funds however, are not performing well. Even after adding the distributions back into the share price, jepy is barely back up to the inception price. It’s just treading water

[@PassiveIncomeInvesting]

they get reinvested back into your investment value not the "share price" the sotck price will always go down over time but your investment value goes up. P.S. JEPY is currently outperforming SPYI

[@JS-hc3tr]

I’m not following how the investment value goes up when your dividend received plus the share price ends up being less than the initial investment. That doesn’t make sense to me. Maybe I’m missing something

[@Alphahydro]

The issue is the ex-dividend pulls the NAV down further than a normal market up-day can lift it.

[@PassiveIncomeInvesting]

that is not an "issue" per say. its because the premiums they collect are huge and give it all out . you need to reinvest some of it

[@DavidWebsterAD]

I thought qqqy has been nose diving since inceptions?

[@PassiveIncomeInvesting]

then why is the return positive?

[@electricfuneral502]

His example of 21 shares get one for two and the rest cash?? I don't understand that. How am i not losing value? Am i getting cash to reinvest to make up the difference ?

[@PassiveIncomeInvesting]

we are just talking about when a split or reverse split happens and if there is any "leftovers" they are paid in cash

[@ilkerbetoner]

hey, great video, one thing keeps rolling in my mind is, if these guys -I mean pretty much all covered call etf's- making money selling calls etc, why do they have to drop all that money they make on the Ex-date? right? it sounds like they are working for you we pay them buying these Etf's they work all that month to sell calls and make daily some cents, whats the point of taking all they made from the NAV which essentially our own money anyways? for instance, if they make 80 cents thru the month seling calls, why not dropping the nav 30 cents and pay us that 50 cents as a bonus? Am I missing anything here?. feels like they are paying you what they made back to from my own money :)) then they advise you to reinvest those in the same fund.. 🤔

[@dkyrtata6688]

The NAV is made up of everything -- the premiums from the covered calls; the value of the underlying stocks; the capital gains/loses of the stocks; the dividends the stocks earn; and your own money. So when the fund manager pays out a 50 cent distribution, they have the choice of paying from any of the types of money listed above. No matter what combination chosen, the fund's NAV drops by 50 cents. From the investor's point of view, the tax implications vary in a non-registered account. So if the investor receives their original capital back (ROC) there is no tax owed on the distribution. However, ROC lowers the ACB by 50 cents which is relevant when the fund is sold. This means that the tax saved from the 50 cent distribution is finally due from a higher capital gain (of 50 cents) when the fund it sold.

[@ilkerbetoner]

Interesting, so that 50 cent is not actually our money from asset, it contains the earned $$ from the calls for that month period

[@dkyrtata6688]

@@ilkerbetoner The 50 cents can be entirely from the covered call premiums but the fund manager can obtain it from any aspect of the fund and even pay out more than what the funds earns. That's why yield is not the same as total return. One interesting thing to note is that if the fund pays out all your original capital (ROC) back to you, your ACB becomes zero. So while other investors can continue to earn ROC, you can only earn capital gains in its place.

[@ilkerbetoner]

Thanks, good info

[@andrebrownakanewworldorder]

The only defiance etf that is any good is SPYT in my opinion

[@freeagent.87]

Why do you think the other ones are bad?

[@andrebrownakanewworldorder]

@@freeagent.87 just look at the 6 month stock price charts of QQQY , JEPY, IWMY

[@jacquesfournier4616]

SPYT will be good only and only if the market is calm (more or less goind in sideways) 😁

[@gugustoy6208]

I have a question bro iwmy or qqqy ?? Any suggestions ?😊

[@carloscouto3832]

Why not both??

[@gigid9606]

The whole point and attractivion to this channel and these specific stocks is for retirment drips. I get peoe want to take profit right away, but some of us are in the saving and building stage, so i dont understand constantly changing stocks every few months.

[@somebrownguy2865]

Jay recommends reinvesting 90% to 99% back in? That’s pretty high. I was thinking more like reinvesting 60% back and living off the 40%.

[@napoleonmdusa8877]

This sounds workable for me too while still providing a decent dividend that can be used for living expenses.

[@carloscouto3832]

The key is to grow your share count to a point where you can live off a portion of the distribution. These funds compounding at 40% + will het you there faster than any other investment

[@napoleonmdusa8877]

@@carloscouto3832 That's why I think of this fund more as a growth fund than an income fund.

[@TD-lv1td]

Grazie Adriano. When is part 3 coming out?

[@PassiveIncomeInvesting]

29

[@etienne59118]

Great video. Thanks

[@blanksy_-]

it is indexing but still poor returns compared to a variety of Yieldmax IMO

[@dwaynecunningham2164]

Thanks again dude. You RoC!

[@Martmi29]

The reason Roundhill does their trade at market open and not at the close and overnight is to leave their synthetic long (deep-in-the-money buy-call) uncapped so that they capture any and all upside appreciation overnight. Then in the morning they will sell their call typically 0.5% out of the money to generate the income.

[@fsabeti]

qqqy and jepy are not good investments i think.

[@DerivCapital]

bro your killing me with these broken up interviews

[@efullname]

My only complain is we don't have one in Canada.

[@kerzberz422]

We will soon check global x new etfs coming soom

[@atimko123]

1 year charts tell me all I need to know. Looks like a set of stairs....down.

[@PassiveIncomeInvesting]

looking at charts is for children

[@shaungauthier9329]

Strong growth?

[@PassiveIncomeInvesting]

AUM

[@TheSmartLawyer]

Erosion isn't income. It's an insult to your intelligence paying back your own money to you while your investment becomes worthless

[@dkyrtata6688]

If it pays back all your money, you end up having paid nothing for it. So even if it is worthless, you paid nothing. I know of no fund that is worthless and I doubt there are any as a result of their distributions. That said, I know of one split fund whose class A shares had a NAV of zero for a short time in 2020 and continued to pay and still does today.

[@freeagent.87]

You should change your name

[@mom2collegekids26]

Where’s part 1 and part 3???

[@PassiveIncomeInvesting]

1 is out... 3 is not out yet

[@FA9082]

Adriano has put a large % of his portfolio in Defiance bc he doesn't know how to do math 😂 The total returns on Defiance are trash compared to other covered call funds

[@freeagent.87]

Looks like you haven't done the math yourself. Both qqqy and iwmy are positive in terms of total return 🤡

[@FA9082]

@user-bu6wf5xs3h Your QQQY stat is wrong. Seeking alpha says YTD TR: JEPQ - 11.92% BALI - 10.22% GPIQ - 9.70% SPYI - 8.03% BIG GAP JEPY - 5.39% QQQY - 4.59% There's LITERALLY no reason to buy Defiance. There are numerous funds with double the returns

[@intramatrix]

A loss is a loss no matter how many dollar signs you paint over it. Some investors are okay with that, others are not.

[@PassiveIncomeInvesting]

a gain is a gain no matter the stock price. two can play that game :)

[@intramatrix]

@@PassiveIncomeInvesting 🤣

[@WinningCoachdotcom]

He contradicting himself. When you ask about the nav erosion he says you have to look at total returns. When you ask him about total returns he says you to look at the income created. The fact is most investors do like huge nav erosion.