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  5. YTSL: Tesla (TSLA) Yield Shares Purpose ETF. [Telsa Yield Shares Purpose ETF]
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Investment Q&A

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Q: Tesla (TSLA) Yield Shares Purpose ETF. With some 'risk' funds I've made an investment in this stock. With a 15% yield it's likely "too good to be true". Can you give me some pros & cons about this ETF.
Asked by Graham on September 14, 2023
5i Research Answer:

Tesla Yield Shares (YTSL) offer a yield of 14.3%, but employ a covered call strategy (on 50% of the portfolio) as well as moderate leverage of 25% which will benefit an investor in an uptrend, but will work against that investor in a downtrend. The yield is attractive, but investors can give up capital gains here. This year, YTSL's units have returned ~108% while shares of TSLA have returned 120%. While they serve a purpose, we think investors are getting enticed by yield, and may not fully understand the risks here. If TSLA declines, the leverage is going to amplify the decline. Option premium will offset this somewhat, but the potential for a sharp decline is certainly existant. It could be ugly under certain scenarios. There are some currency risks as well, as YTSL is priced in Canadian dollars. YTSL is also fairly small, so there is some liquidity risk as well. But...if one understands the product, and one really likes TSLA as an investment, it has its attractions. 

Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in TSLA.