QYLD in a Bear Market: Will this ETF still Pay Monthly Dividends? - YouTube

well we are officially in a bear market and  one fund that has always received criticism  

about how it's never been through a bear  market is the fun q y l d well guess what  

we're now in a bear market officially and we can  put qild up to the test and that is exactly what  

we're going to talk about in today's video  qyld currently pays 11 to 12 dividend yield  

and that's pretty darn attractive to most income  investors it's grown actually from 3.8 billion  

under assets to today's 5.8 billion net assets  due to investors piling in on this fund to take  

advantage of the monthly income and right now  you get anywhere from about 17 cents to 20 cents  

per share every single month it's kind of nice to  get paid every single month by investing into a  

fund is it not but the issue kind of comes down to  the price right a lot of people wondering what's  

the deal with the price this fund isn't about the  price it's fun is about the monthly distributions  

so in this video today what we're going to talk  about is which investors qyld actually benefits  

how qyld is actually going to hold up in this bear  market and we're going to check qyld against qqq  

and even against the s p 500 to see how  it's actually doing in the bear market  

that is 20 22. you ready to get started don't be  dumb tap the thumb let's get right to it so how  

they actually pay out their monthly distributions  is they write covered call options it's an options  

trading strategy against the nasdaq 100 it's the  top 100 non-financial companies that are listed  

in the nasdaq stock exchange now if you want more  detail on how that money every month is actually  

paid out and how that all works you got to check  out my qyld tax video that i'll link down in the  

description below as well as up above so you can  check that video out after this one because if  

they don't make money on their options premiums  they pay you a different way and yes they've been  

paying consistently and very strongly since they  first launched in 2013 but some of that comes with  

some tax liability you need to make sure you check  that out before you invest in this particular fund  

so who actually benefits from qyld well if you're  expecting some growth on a qyld this really isn't  

your jam qyld is an income investor's dream  this is about somebody that's focused on  

income distributions on a regular basis on a  somewhat reliable basis and this is what qyld is  

all about and that's what i was mentioning earlier  with the price as we see it over here today  

on seeking out 1777 per share if you look back  here it's dropped 20 percent over the last year  

and if you go over the last five years it's down  11.24 you can see a little bit later um this  

past 2021 it was at 22.90 a share of course  down to 17.77 but it's not about the price  

the price will remain relatively flat right around  the 20s or the 15s or so because of how this fund  

actually operates on its covered call options  writing strategies and you know it's interesting  

to actually see it in this bear market this isn't  a correction this isn't a flash crash like back in  

the pandemic this is truly a bear market and it's  going to be interesting to see how qyld actually  

holds up now if you're an income investor this  one's going to be super interesting for you to  

understand and how it weighs itself over the  next couple months especially if we continue  

from a bear market into a long-standing recession  that some investors are calling for how is qild  

actually going to hold up in this market and  this is really interesting i put this against  

our portfolio visualizer as i always like to do  so if we look at this i put ten thousand dollars  

into qyld and i just kind of put it in i set it  and i forget it and i don't reinvest any of the  

dividends absolutely not so what happens from the  time that qyld launched until today what does that  

look like well if we come down here here's the  answer our initial balance of ten thousand dollars  

without dividends reinvested would only be worth  six thousand eight hundred and forty dollars today  

what an absolute terrible thing right but remember  all that time you've been receiving dividends so  

technically you're getting the payoff and because  you were not reinvesting the dividends you were  

getting that cash back so what did you do with  that cash i don't know did you invest it into  

other stocks or did you cash it out and use  it for some other fun money or whatever else  

you'd want to do with it and that's the  whole reason that this is also interesting  

this will draw down on your balance when they do  return of capital they don't always make money  

on the covered call options writing strategies  that they do let's face it especially in a bear  

market it's going to be hard to do that and then  what happens well then they have a decision they  

have to make and that's called return of capital  where they're taking your money and returning it  

to you based on a monthly distribution which is  also why we see this go from 10 000 down to 6840  

on top of the bear market again you want more info  on that whole return of capital you got to check  

out that tax video after this one but then look at  our annual returns you can see 2022 is the first  

test of what is actually going to happen with this  particular fund down 16 otherwise it's been up  

yes even in 2020 it was up 7.68 at the end of the  year but what happens if you reinvest the dividend  

so we just looked at this went from 10 000 to  6840 if you would have reinvested the dividends  

it's a little bit of a different story if you  compare apples to apples your ten thousand would  

actually be worth sixteen thousand four hundred  and thirty six dollars today so even amongst all  

the other pain in agony it has performed at least  okay giving back 6.02 percent since its initial  

launch but it makes you wonder what about qqq  which also tracks the nasdaq 100 index but that  

particular fund is not based on income investors  that is based on growth and i have a video on qqq  

if you want to learn more about that one i'll also  link it down below if you want to check that one  

out too but if you're focused on growth that might  be your jam if you're focused on income qld might  

be your time it's all up to you and you still  got to do your own research none of this video  

today is financial advice but let's compare  them if we did ten thousand dollars on qyld  

and another ten thousand dollars on qqq which one  is doing better in 2022 so i'm actually going to  

use 2021 to 2022 ten thousand dollars um we're  going to reinvest the dividends because why not  

qild versus qq let's see what's happening so  i'm gonna analyze the portfolios and check this  

out so you're ten thousand dollars on qqq landing  to you at nine thousand two hundred and thirty  

four dollars it's still down because we're only  looking at one year but then qqq is down even more  

ten thousand to nine thousand and five dollars  drawing down six point seven five percent qq is  

actually down lower than qyld with the dividends  reinvested we're looking at qyld and you know  

we're like okay if you look at the year to date  we're down 20.28 percent from january all the way  

through to july and then you look at qqq and it's  down 26 so qyld is actually beating the nasdaq  

index i mean that is pretty good comparatively to  our benchmark which is qqq but let's compare qyld  

over here at this nice little uh 20.28 percent  down for 2022 to the s p 500 another great index  

and we'll use spy spy as our benchmark for  the s p 500 20.28 percent down compared to  

18.64 now that is super interesting isn't it  because here we are with the s p falling down  

as much as it has qild even though it is falling  down two percentage points lower isn't as bad as  

we thought it would be and that was a lot of  the criticism of qyld in the early days saying  

hey this thing hasn't been through the bear  market how are we going to know what it does  

when we approach said bear market well 2022 as  sad as it is has blessed us with this opportunity  

to really look at qyld a whole different way  now somebody else asked me well wait a minute  

what if the reverse happens and all of a sudden  the stock market recovers and shoots to the moon  

will they be able to keep up with all of this  stuff well remember it is a covered call writing  

option strategy if they can get some calls high  enough there could be some opportunities for  

some premiums but right now and call me bearish  if you want or pessimistic even though i'm not  

really trying to be pessimistic i really don't  see the stock market having a sudden surge and  

recovering to like an all-time high right away  i think we're actually going to see a recovery  

that is a little bit more slow and steady than we  have in the past remember the chronovirus pandemic  

crash that happened in march 2020 i mean it went  boom it just fell off a cliff and then we all of  

a sudden surged dramatically and a lot of that had  to do as much as you don't want to maybe admit it  

let's be honest with ourselves because of the  stimulus checks because there was so much money  

being pushed into the market by government  sending all this extra money and help and support  

it raised up the stock market and yes the good  thing is we got back on track very quickly from  

a very devastating situation but it also you  know surged us quite significantly i don't see  

that happening again in fact right now the fed  is really focused on dialing back the inflation  

with a lot of interest rates adjustments  so any type of recovery i think will be  

great but a little bit more slow and  steady than we have seen in 2020 and 2021.  

so i'm so excited about the fact that uh  you know qyld is that income investors  

interesting opportunity again it is a distribution  not technically a dividend because the dividend  

is based on a company's profit paid out to you  the investor whereas qyld is an interesting fund  

that's based on options writing strategies  and therefore they give you a distribution  

based on the income they generate through that  particular strategy what are your thoughts on qyld  

comment down below and let me know check out  this video next we'll see you on the next video