New YieldMax Fund Holds MSTR, COIN to Generate Crypto Income
Actively managed LFGY combines crypto industry exposure with options trading in a new twist on income generation.
YieldMax, whose 31 exchange-traded funds focus on generating income from options, launched an ETF Tuesday that emulates the same options strategy using Coinbase Global Inc., Microstrategy Inc. and other publicly traded companies highly exposed to cryptocurrency.
The YieldMax Crypto Industry & Tech Portfolio Option Income ETF (LFGY) offers a combination of crypto-related stocks and options trading strategies designed to generate income, as detailed in the fund's prospectus. The fund dipped 1.8% in its first afternoon of trading.
YieldMax, which manages $4.28 billion, said in a release that the actively managed ETF will hold 15 to 30 companies involved in crypto asset mining, blockchain technology development, and crypto asset trading platforms. More than 30% of its assets are in Microstrategy, among the world's largest bitcoin holders, and Coinbase, operator of the world's largest publicly held cryptocurrency exchange. The company's fund description doesn't break down the holdings according to shares and options.
The launch comes as the price of bitcoin has resumed its climb past $96,000 after dipping to around $90,000 several days ago. The biggest cryptocurrency has more than doubled over the past year, and crypto-related ETFs, including iShares Bitcoin Trust (IBIT), have pulled in tens of billions of dollars in inflows.
The prospectus states that the fund doesn't hold digital assets like bitcoin. Instead, it will invest in companies deriving 50% or more of their revenue from crypto-related activities. LFGY, which carries an expense ratio of 0.99%, also lists Mara Holdings Inc., and Cleanspark Inc. among its top five holdings.
YieldMax’s existing options-strategy funds have shown varied performance, with the YieldMax NVDA Option Income Strategy ETF (NVDY) more than doubling in 2024, while several other YieldMax funds topped the list of worst-performing ETFs, including the YieldMax MRNA Option Income Strategy ETF (MRNY), which fell 60.3%.
Crypto Investment Strategy
The fund employs multiple options strategies including covered call, put spreads and so-called diagonal call spreads to generate income while maintaining exposure to potential upside in crypto industry stocks, according to the prospectus.
Eligible investments include companies focused on digital wallet services, decentralized finance platforms, and blockchain infrastructure providers, the prospectus outlines.
While concentrating on U.S.-listed equities, the fund may also invest in foreign securities including those from emerging markets, according to the investment strategy outlined in the prospectus.
The fund will maintain a minor allocation to cash or U.S. Treasury securities, not exceeding 10% of total assets, which will serve as collateral for options strategies, the prospectus noted.