YieldMax Universe Fund of Option Income ETFs: Recovering from a 40% NAV Erosion

The YieldMax Universe Fund of Option Income ETFs (YMAX) has seen a 40% decline in net asset value (NAV) since its inception on January 16 last year. However, the fund is now on an uptrend and trades at around $13.95. Despite the initial downturn, the worst may be over for YMAX, which could see sustained upside.

The YieldMax Universe Fund of Option Income ETFs (YMAX), which has seen its net asset value (NAV) erode by around 40% since its inception on January 16, 2024, is now showing signs of recovery. The fund, which aims to provide investors with exposure to a broad range of investment opportunities under a single fund, has stabilized and is currently trading at around $13.95 [1].

Underlying Holdings and Strategy

YMAX is a fund-of-funds that holds a diversified basket of other YieldMax ETFs, each employing covered-call strategies on individual stocks. As of July 17, 2025, the fund's top holdings include the YieldMax MARA Option Income Strategy ETF (MARO), which focuses on the Bitcoin (BTC-USD)-linked mining stock of Marathon Holdings (MARA), and the YieldMax HOOD Option Income Strategy ETF (HOOY), which covers Robinhood (HOOD), a retail trading platform [1].

Income Strategy and Performance

The fund's income strategy involves obtaining premiums from each underlying YieldMax ETF that sells call options on its respective stock. This premium is distributed regularly to investors. Unlike classic covered calls, YMAX uses a synthetic long exposure to the stock, then writes call options against that position, to maximize gains even when not holding the physical shares. However, this strategy comes with a relatively high expense ratio of 1.28%, but offers exceptionally high yields of 59.15% on a TTM basis [1].

NAV Erosion and Total Returns

Despite the high yields, YMAX has suffered a loss since its inception, with its share price losing over 25% over the last year. This is due to the covered-call strategy, where the fund sells call options prematurely, capping potential gains. However, when considering total returns, including reinvested dividends, YMAX has delivered gains of 16.43% since inception [1].

Recent Uptrend and Factors Driving It

After fluctuating, YMAX has stabilized and is on an upward trajectory. This positive shift is attributed to several factors, including the slowing rallies in AI and crypto stocks, which make call selling more effective, and the fund manager's optimization of its option strategy and monthly to weekly distribution change [1].

Future Prospects

Looking ahead, the market is expected to see AI as a theme with more moderate momentum, and stablecoins/digital assets are gaining wider recognition. This could see the stablecoin market surge, and volatility remains elevated but should be lower than in April. In these circumstances, covered call strategies are likely to be more income-friendly, resulting in the market moving sideways or being slightly bullish [1].

Comparison with ULTY

Comparing total returns since February 2024, YMAX has delivered better total returns than the YieldMax Ultra Option Income Strategy ETF (ULTY), despite paying much lower yields. This suggests that YMAX's income strategy with indirect exposure has preserved NAV better than ULTY's more "aggressive" positioning [1].

Conclusion

After experiencing a significant erosion in its NAV, YMAX is now showing signs of recovery. The fund's strategy of using covered calls and its diversified portfolio of ETFs has helped it to stabilize and deliver positive total returns. With the expected market conditions, YMAX could see sustained upside in the future.

References

[1] https://seekingalpha.com/article/4803265-ymax-etf-this-fund-of-funds-could-see-sustained-upside