Summary YieldMax Crypto Industry & Tech Portfolio Option Income ETF (LFGY) aims to generate income by writing call spreads on crypto-related equities. LFGY's structure has significantly underperformed its underlying holdings, returning only +13% YTD versus a 50%+ return from the portfolio's largest stocks. The ETF's approach fails to effectively convert capital gains into dividends and exposes investors to full downside risk during market downturns. Given poor performance and structural issues, investors are better served buying the underlying equities outright rather than holding LFGY. Thesis In a world of ever expanding 'flavors' of funds, investors should try to understand how complex investment choices work. While some people just look at a fund's nomenclature to make an investment decision, that sort of action can backfire. While we have seen many single-name dividend funds work well, contrary to expectations, more diversified ETFs have been less successful. In today's article we are going to have a closer look at the YieldMax Crypto Industry & Tech Portfolio Option Income ETF ( LFGY ), its structure and holdings, and articulate our view on this exchange traded fund. An ETF aiming to extract dividends from crypto equities Let us start by looking at the fund's objective: LFGY is an actively managed ETF that seeks current income and capital appreciation via direct investments in a select portfolio of 15-30 Crypto Companies. LFGY seeks to generate income primarily by writing (selling) options contracts on some or all of its portfolio Crypto Companies. LFGY aims to distribute such income on a weekly basis. LFGY therefore falls in the classic buy-write category via its investment objective. This sector is very popular, especially for funds covering the S&P 500 and Nasdaq indices. The 'trick' with buy-write funds is that they need to shadow via their total return the index returns. The larger the basis where the buy-write funds lags, the poorer the structuring and the job done by the manager. We have covered such funds in the CEF world, where the market has 'awarded' a poor performance with a massive discount to net asset value. An example of that is Nuveen Dow 30 Dynamic Overwrite Fund ( DIAX ) which is currently trading with a -10% discount to NAV. Therefore the critical aspect to watch for LFGY is how its structuring translates into a robust total return that follows its underlying portfolio price appreciation. Let us have a look. Current fund holdings The name is an active ETF that can change its holdings, thus we can only look at the current composition: Holdings (Fund Website) Please note the fund has long positions in crypto related equities, and then layers options on top. Let us look at an example: The fund has a long position in Bitmine ( BMNR ) accounting for 2.5% of the fund The ETF then sells a call spread on BMNR for the entire position The call spread is a Oct 25, 2025 maturity one with 59/66 strikes BMNR is currently trading at $56/share, thus the sold options make money only when the common shares are below $59 This sold call spread allows the fund to profit if BMNR has a vertical price move higher above $66/share In essence an investor needs to take-away from this section the fact that the ETF does not give up all its upside via a high premium call option, but has structured selling call spreads. Call spreads provide for less of a premium, but also offer upside when a stock aggressively rallies. Is it a good idea to do this? We shall see in the performance section. Performance Now remember that the whole purpose of these buy-write funds is to transform capital gains into dividends. To the extent they do that effectively, we can consider them good funds and an alternative to an outright long portfolio. If they do not perform that task then they end up being value traps. Let us have a look at LFGY: Data by YCharts The ETF started in January 2025, so the above graph encompasses an almost correct year to date picture. We can see the total return at a mere +13.8% figure, while the price/NAV has decreased by -27%. In order to get a sense on how that figure works against an outright hold in the portfolio, we are going to take the largest 11 holdings which account for roughly 70% of the portfolio and see how they did: iShares Bitcoin Trust ETF ( IBIT ): +31% Ytd Coinbase ( COIN ): +53% Ytd Robinhood ( HOOD ): +299% Ytd Hut 8 ( HUT ): +95% Ytd Strategy ( MSTR ): +21% Ytd Riot Platforms ( RIOT ): +90% Ytd Mara ( MARA ): +12% Ytd Bitdeer ( BTDR ): -10% Ytd Cleanspark ( CLSK ): +73% Ytd Core Scientific ( CORZ ): +26% Ytd Nu Holdings ( NU ): +47% Ytd Even before we do any calculations an investor can see that the +13% produced by LFGY is nowhere close to the performance of the underlying portfolio. In fact if we apply the above year to date figures and individual weightings and consider the rest of the holdings with a 0% return, we still get a portfolio return of over 50%. So an investor who would have bought the above names outright would have gotten a 50% total return, while LFGY provided for only +13%. This tells us the structuring is not good, the entry and exit points are also not good (it is an active fund), and that investors are better served by just buying the underlying names outright. In our view any difference in performance above +/-10% denotes poor structuring. Analytics Let us also look at some of the fund's analytics: AUM: $0.2 bil Expense ratio: 0.99% Dividend frequency: monthly Distribution: 60% (will fluctuate) Structural considerations We have determined in the above analysis that holding the portfolio of underlying stocks would have yielded a total year to date return in excess of 50%, while the LFGY product only produced +13% in total returns. Thus not a good way of extracting dividends from the underlying holdings capital gains. Moreover, it is important to note that the NAV of the fund is actually down -27% via the employed structure. In essence an investor is now sitting on a name which is down -27% from a price perspective, while the total return including dividends is a mere +13%. This dynamic will continue, and there will be no 'amortization' of the initial investment here. In our view the fund should consider doing a total return structure with an investment bank that offers a better payoff profile than the employed call spreads, or back test other alternatives because the current derivative overlay just does not produce good results. In a downturn however, the fund has a very significant downside: LFGY was down -30% on a total return basis in April 2025 when the market tanked. Conclusion LFGY is a buy-write fund that focuses on a portfolio of equities from the crypto industry. While the underlying holdings as a portfolio have rallied more than +50% this year, LFGY has managed only a +13% total return, while down -27% on a price basis. The fund's structure is not adequate at transforming capital gains into dividends, while it retains the entire downside in a bear market.
