LFGY: Broader Means Better

Summary LFGY combines crypto infrastructure with tech enablers for broader upside potential. Employs varied options strategies (collars, diagonals, calendars) to generate high monthly income (~40% extrapolated). LFGY suits investors looking to ride crypto adjacent infrastructure with less volatility while deriving high income from it. Investors must keep expectations right, as the high yield comes at the cost of NAV erosion – de-risking investments continually from the underlying. Yet another crypto-based income offering from YieldMax. The YieldMax Crypto Industry & Tech Portfolio Option Income ETF ( LFGY ) derives option writing income on a cash portfolio of crypto securities and related technology companies. And introduces a new flavor in diversification from the existing bitcoin related income products I have covered in my pervious writings, viz. CONY , MSTY and YBIT . The major point of difference I see is the varied portfolio underlying. The top ten holdings (of 19 securities I saw) at the time of writing looks like this LFGY Top Ten Holdings (YieldMax LFGY) It is interesting to note the presence of indirectly connected securities like Tesla and NVIDIA, making for a wholly diversified exposure compared to the single stock income offerings I have explored so far. What is also interesting is the mention of all sorts of option writing strategies such as collars, diagonal spreads and calendar spreads in its prospectus – not only the call spreads mentioned in all other YieldMax income ETFs. We will check what these differences translate to in terms of performance, but the option structures adopted are likely to limit upside opportunity losses (compared to the call write) and hence also protect the NAV better. The diversification by sector and bitcoin infrastructure type is highlighted below. Diversification should do well across market conditions to a larger extent than concentrated bets, particularly important for an income plan. The presence of exciting additions like Tesla and NVIDIA (grouped as other in the distribution by infrastructure type) is not material (~4%), but does add flavor to the mix. Also, how the portfolio changes in the future could also add potential alpha to this extremely active offering. LFGY diversification by sector (Image generated by author using data from YieldMax LFGY) LFGY diversification by infrastructure type (Image generated by author using data from YieldMax LFGY) Performance LFGY is a relatively new offering with not too much track record to gauge performance well. Also, since there is no true single underlying nor an index tracking the portfolio, judging the underlying’s suitability in terms of optimum volatility is skipped from this analysis. The closest index I saw to benchmark performance against is the BITQ ETF, but the holdings (though similar) show significant differences. Other than the weightage and composition differences, technology innovators like Tesla and NVIDIA are completely missing from BITQ. BITQ ETF Top 10 Holdings (BITQ ETF) Comparing performances across the similar ETF universe, in the limited time period of common existence, the first thing to note is a similar trend across all. However, the subtle differences will get magnified as market cycles change and the time period extends. LFGY sits in the middle of the stack, overall growth of $10K would have been higher than BITQ and CONY and lower than YBIT and MSTY. Data by YCharts I will divide the data into two phases of downtrend and uptrend to get a cleaner view of market condition-based performance. As seen in my previous analyses, ETFs that perform better in downtrends are usually a better longer-term bet as an income plan. It will also help see whether the tech allocations in LFGY delivers the diversification as bitcoin falls. Data by YCharts The results show vast differences. YBIT, which I had earlier rated a buy, performs exceptionally well, while LFGY again finds itself in the middle. This could be attributed to the fact that pure bitcoin plays held up better in the period that crypto companies like Coinbase or a larger aggregated collection of crypto companies like BITQ faltered. That said, LFGY does perform better than BITQ and CONY. Which means that LFGY is the ETF of choice if you are looking to derive income while choosing to ride bitcoin adjacent infrastructure, i.e. companies into exchanges, custody platforms and indirectly poised to benefit from bitcoin volumes than bitcoin itself (and some direct exposure thrown in). Income Potential The ETF has paid out roughly 17% of capital invested since its inception in January 2025, as payouts. While that has come with a commensurate erosion of NAV, the extrapolated annual payout of ~40% has use cases. First, in a widely different market trending down, LFGY will likely outperform the underlying holdings while deriving income. Second, in an upward trending market, LFGY will see less NAV erosion while generating these high levels of returns. Third, irrespective of market trends, a faster payout suits those who are looking to de-risk themselves quickly and reinvest the payouts in other alternatives, while continuing to ride the underlying for alpha. Investment Advice For investors who are mildly bullish about bitcoin adjacent infrastructure companies but do not want to proactively manage a portfolio and derive similar income levels, as LFGY, from it, LFGY is a buy. Although, it is in its nascent stages and untested across a larger tenure and across market cycles. The premium discount to NAV is reasonable compared to some other YieldMax products. The maximum deviation is ~1%. Which means there is no pressing need to average out an entry over days to ensure the deviations smoothen out. Premium Discount to NAV – LFGY (YieldMax LFGY) When investing in YieldMax’s aggressive payout ETFs, keep in mind that they fit into the speculative yield enhancer part of your portfolio more than pure income play like multi asset allocators with lower returns. The dividend payout is not purely premiums earned from option writing (as seen with the total returns), but also a return on capital deployed. If you set your expectations right, then LFGY could be just the bitcoin ETF that makes a lot of sense in your overall income strategy.

Source: Seeking Alpha