ETF High Yield ETF's for cashflow + a bit of growth?

Who doesnt understand the product or its strategic use? Of course you dont buy Umax for direct capital growth . The question was for a HIGH YIELD ETF with a little capital growth. Why on earth would you buy a something that gives 1.8% yeild and declining yields if you want yield.. Once again you NEED 3 X MORE MONEY to get the same income with VGS. Income allows you to borrow money allows you to leverage so you can own 60% more shares, than you can have 2 X more income again = 5 x more and growing income, and you can put food in your tummy too. 1.8% income doesnt even cover cost of money. Try going to a bank and asking for some practically free money from the recent large equity gains from property with your 1.8 % dividend. HACK gives 5 X more income than VGS and has Given 36.26 total return last FY

 

An interesting structuring point.

So such an investor is asset rich and wants to leverage further but doesn't have enough income to service debt ? Does such an investor exist in practice?

They might have an ability and willingness to take on such risk, but do they need to, already being asset rich?

Let’s compare $1m in YMAX vs VHY at inception in Nov 2012 with no reinvestment of distributions.

Total annualised return: 6.15% vs 9.57%
Total distributions: $665k vs $592k
Remaining capital value: $799k vs $1.30m

YMAX still looks pretty terrible losing 500k capital compared to VHY for only 70k extra income over 9 years.

UMAX vs IVV from Sep 2014
Total annualised return: 10.69% vs 17.54%
Total distributions: $465k vs $207k
Remaining capital value: $1.2m vs $2.2m

Bigger difference in income sure, but the end result still looks pretty terrible.

Some questions

• How do lenders treat dividend income for servicing? Do they count 100% of it?
• What sort of interest rates are involved? Eg are they higher than for normal servicing
• Do they distinguish aspects of the distribution at all. Eg HACK is mostly your own capital being returned to you via turnover / rebalancing.
• If the income is being used to service debt, what is the investor using to live off, selling down?

Would be interesting to do the sums, but I suspect UMAX still couldn't catch the IVV result after cost of leverage. The IVV option is also much lower risk.

The original assessment stands. YMAX and UMAX are terrible products.

 

OP was investing in July 2021 not 2012, Proof of the pudding is in the eating. VDHG is down 2% only giving 3% Yoc a loss after inflation and interest. VHY has had no gain yeild of 5%YOC also gone backwards in real terms. VAS down 4% giving a 7% YOC again gone backward in real terms. UMax is up 5% and giving 7% YOC, NDQ is up 20% and giving YOC . VGS up 10% and giving 2% YOC.

 

Can cherry pick whatever dates you wish. 28 months is pretty short. If I was deciding between the two, I'd use the full data set to make an informed decision. Outcome could go either way over short periods given the active management and strategy of UMAX/YMAX, however for a long term hold very unlikely to out perform a simple low cost index.

IVV might be a better baseline to compare to UMAX as they are both S&P500.

Over the 28 months, it looks like
IVV (8.95% total return) is ahead of UMAX (7.87%)
and
YMAX (7.26% total return) is ahead of VAS (4.96%)

 

I use VHY as my core Australian holding rather than VAS because I like the extra yield and also see it as slight Value tilt.

So far this has worked out.

I also have a holding in Ymax.

My thinking there was that I could get the income I need from a smaller investment in Ymax and use the amount I would otherwise have had to outlay to invest in a true growth fund.

Again, so far this has worked out. Ymax is up a bit, and the growth play is up a lot.

Overall I’ve had better growth and income from the combination than alternatives.

A riskier but potentially more rewarding option would be a geared fund like GEAR.

It tracks the ASX200 but uses gearing to give you double the capital gain and double the dividends.

The downside is that it doubles the downside.

Given the recent market surge I certainly wouldn’t recommend jumping in now, but a juicy correction is an opportunity for the brave

 

zoom out on the historical downward trend on ymax to see how it eats into captial to produce that yield.

might as well host a broadly diversified low cost fund and sell as needed