TSLY: Investors love this 50% yielding ETF but there’s a catch

The YieldMax TSLA Option Income Strategy (TSLY) ETF is doing well as investors chase its 50% dividend yield. The fund has added substantial assets, bringing its total holdings to more than $760 million.

Data shows that the fund has attracted inflows in all months this year since February. It gained most of funds in August when it added over $301 million worth of assets. In all, TSLY has had net inflows of $817 million.

It is clear to see why investors are interested in the fund. According to its website, TSLY has a distribution rate of 49.11%, which is higher than most active and passive funds.

However, investors should be cautious about this yield, which seems to be too good to be true. For one, as with other actively managed funds, the monthly yield tend to differ from one week to the other.

For example, as shown below, the last distribution was $0.5849. A week before, the fund distributed $0.8303 to its shareholders. Therefore, there is a likelihood that this deviation will happen in the future.

TSLY ETF distributions

For starters, The YieldMax TSLA Option Income Strategy ETF is a fund that seeks to generate regular monthly income by selling call options on Tesla shares. By doing that, the fund aims to harvest attractive yields while gaining from the stock’s appreciation.

At the same time, the total return, which includes the fund’s stock performance and the distributions, is not all that good. While the TSLY’s total return year-to-date is 71%, Tesla has generated a 1405 return.

TSLY vs TSLA distributions