Netflix Yield ETF Delivers 16% Returns in 5 Months: A High-Yield Gamble on Streaming's Future?

Netflix's (NFLX) stock has long been a rollercoaster ride for investors, but the newly launched Netflix Yield Shares Purpose ETF (YNET.NE) is betting that volatility can be turned into an income opportunity. The ETF, which declared a CAD 0.15 dividend for its June distribution, has surged 16.36% since its February 2025 inception, outperforming broader benchmarks. But behind the flashy returns lies a high-octane strategy combining leverage and covered call options—a blend that could make it a compelling, albeit risky, play for income-seeking investors.

The Leverage-Laden Playbook

YNET.NE's secret sauce is its 106.81% equity exposure to Netflix stock, achieved through borrowing cash to amplify bets on the company's growth. The ETF also writes covered call options on a portion of its holdings, locking in premium income while capping potential upside. This dual strategy generates monthly distributions—a rarity in the ETF world—while hedging currency risk (since it converts U.S. dollar-denominated Netflix holdings into Canadian dollars).

The math is straightforward: leverage boosts gains (and losses), while covered calls add a steady income stream. But investors should note the asset allocation: 107.15% of the fund is in Netflix stock, with the rest in cash equivalents and leverage components. In other words, this ETF is a pure Netflix bet, with all the concentrated risk that entails.

Performance: A Fast Start, But a Short Track Record

Since its launch on February 20, 2025, YNET.NE has returned 16.36% year-to-date, with a 6.76% jump in its first month alone. The ETF's volatility, however, is stark: its best month (April) saw a 21.81% surge, while March's worst month dipped -5.79%. For comparison, Netflix's stock itself rose 12.5% over the same period, suggesting the ETF's leverage is indeed amplifying returns—both up and down.

The Risk Equation: A Double-Edged Sword

Investors in YNET.NE are essentially making two bets:
1. Netflix's growth trajectory: The ETF's success hinges on Netflix's ability to retain subscribers, navigate content costs, and compete in a crowded streaming market. A stumble in subscriber growth or a regulatory setback (e.g., antitrust scrutiny) could send shares—and the ETF—spiraling.
2. Volatility management: The covered call strategy may limit upside, but the leverage means losses are magnified. In a downturn, the ETF's NAV could drop faster than Netflix's stock.

Additional risks include:
- Currency exposure: While hedged to CAD, shifts in USD/CAD exchange rates could impact returns.
- Tax treatment: Distributions are classified as capital gains in Canada, which may be advantageous, but investors should confirm with tax advisors.

Is This ETF Worth the Risk?

For income-focused investors willing to stomach volatility, YNET.NE offers a high-yield alternative to traditional dividend ETFs. The CAD 0.33 annualized yield (based on current distributions) is competitive with many dividend stocks, especially in a low-interest-rate environment.

However, this is not a “set it and forget it” investment. Investors should:
- Limit exposure: Treat YNET.NE as a satellite holding, not a core position.
- Monitor Netflix's fundamentals: Track subscriber growth, pricing changes, and content spending.
- Set risk parameters: Use stop-loss orders to mitigate leverage-driven drawdowns.

The Bottom Line

The Netflix Yield ETF is a high-octane income vehicle for investors who believe in the streaming giant's long-term prospects. With a 16% return in five months, it's off to a blistering start—but remember, leverage cuts both ways. For the right investor—someone with a high risk tolerance and a conviction in Netflix's future—this ETF could be a way to profit from both growth and income. Just be prepared for the ride.

Disclosure: Past performance does not guarantee future results. ETFs with leverage and derivatives carry elevated risk.