CONY: Don't Buy This Yield Trap
Summary
- High-income option selling ETFs like CONY often erode principal value, which makes them a poor long-term investment despite high dividend yields.
- This fund's structure, involving U.S. treasuries and a synthetic COIN position, is an inefficient way to generate yield from option premiums.
- CONY outperforms slightly in down and sideways markets, but lags significantly in bull markets, which has lead to a dramatic gap in performance vs. the underlying.
- CONY may suit those needing immediate income, like late-stage retirees, or those who want to downshift a small percentage away from a 'full' COIN position.
- However, we think the fund is a poor choice for most. We rate CONY a 'Sell'.
Klaus Vedfelt
Over the years, we've made no secret of our distaste for 'high income' option selling ETFs that offer extremely high dividends to investors.
Here's a sampling of some of the research we've put out on this topic:
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