Investment firm floats yield-bearing ETF based on MicroStrategy stock

A specialised exchange-traded fund (ETF) agency referred to as YieldMax has filed to launch the primary yield-bearing ETF product based mostly on shares in Michael Saylor’s Bitcoin holding firm, MicroStrategy.

In keeping with a Dec. 7 submitting with the USA SEC, YieldMax has formally utilized to launch its Possibility Earnings Technique ETF based mostly on shares in MicroStrategy, slated for launch someday in 2024.

If accredited by the SEC, the ETF will commerce beneath the ticker “MSTY” — only one letter off MicroStrategy’s pre-existing ticker “MSTR.”

Yieldmax’s pending ETF makes use of a “artificial lined name” technique, which includes a mixture of shopping for name choices and promoting put choices to earn income. These proceeds are distributed to holders of the MSTY ETF as month-to-month payouts.

Notably, the ETF won’t ever personal any spot holdings of MicroStrategy shares, completely producing revenue by buying and selling MSTR derivatives. To lower potential losses, the fund limits its upside publicity to a 15% acquire on the decision choices every month.

Yieldmax says the month-to-month yields generated by the ETF aren’t immediately depending on the expansion of MicroStrategy shares, which means that buyers would nonetheless earn yields on the ETF even when share MicroStrategy shares have been to take a major hit.

A number of commentators on X (previously Twitter) questioned why somebody would select to put money into such an ETF as an alternative of simply shopping for the corporate inventory or its choices immediately.

So first we commerce the beta of SPX which is BTC, then we commerce microstrategy which is the beta of BTC which is the beta of SPX, then we commerce yieldmax which is beta of microstrategy which is beta of BTC, which is beta of SPX

Beta of beta of beta of beta, received it https://t.co/LrSXfbnP0X

— Marusha (@mattomattik) December 7, 2023

Yield-bearing ETFs are sometimes marketed to conservative buyers seeking to earn barely above-average returns on probably the most unstable components of the inventory market. Due to the acquire limits imposed by the fund managers, they’re seen as a cautious, but doubtlessly extra worthwhile manner of producing passive revenue from large swings in inventory costs.

YieldMax presents a roster of 18 comparable ETF merchandise for different main tech corporations corporations together with Tesla, Apple, and Nvidia.

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MicroStrategy shareholders have witnessed their fair proportion of outsized positive aspects this yr, with the costs of the corporate’s shares rising greater than 290% since Jan. 1, per TradingView information.

On Nov. 30, MicroStrategy co-founder Michael Saylor introduced that the corporate acquired an extra 16,130 BTC for roughly $593.three million, a mean value of $36,785 per Bitcoin.

As of Nov. 29, MicroStrategy holds some 174,530 BTC — value roughly $7.6 billion on the time of publication.

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