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Dogfight: Amazon Covered Call ETFs One v. One

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, 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 in the market long enough to compare returns for covered call ETFs with the same underlying stock.

So let’s pit two head-to-head in a virtual dogfight of Amazon-trading ETFs.

Silhouettes of training aircraft performing aerobatics on a clear sunny day.

The YieldMax ETFs were the first with this type of ETF, launching their initial 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.

Let’s start at the top of the alphabet and compare the two Amazon.com (AMZN) covered call ETF returns since November 1, 2023.

The current quoted yield for the YieldMax AMZN Option Income Strategy ETF (AMZY) is 34.14%. Since November 1, the AMZY share price has appreciated by 10.35%. The $2.70 in dividends paid add 13.12% to the share price gains. A little math gives a total return of 23.47% since November 1.

The Kurv Yield Premium Strategy Amazon (AMZN) ETF (AMZP) shows a current distribution rate of 15.85%. That’s almost 20% less than the current yield quote for AMZY. From November 1 through March 18, AMZP share price appreciation came in at 17.04%. Over the selected period, AMZP paid $1.40 in dividends. Due to the funds’ ex-dividend schedule, over my selected time frame, AMZP paid one fewer dividend than AMZY. The dividends earned add 5.46% to the share appreciation return, giving a total return of 21.68%.

Those returns are surprisingly close. Or maybe not surprisingly, since the two ETF sponsors use a covered call strategy on the same stock. AMZN has been in a strong uptrend over the past months, and both funds captured a solid portion of the share price appreciation.

I will do the same calculations for the other five Kurv funds against their YieldMax counterparts over the next five 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 – to join, click below.

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This post was originally published on InvestorsAlley