Investment Q&A

MSTY is a derivative play on MSTR. MSTY does not hold MSTR, but rather it buys and sells call options on MSTR, and aims to harvest yelds, while retaining some participation in the price gains of MSTR, albeit capped. It is interesting, but largely we feel one needs to have an underlying bullish thesis on MSTR and bitcoin, and also be OK with capped upside potential in the name. It is unclear how this strategy will unfold in the event of a bitcoin price decline, but with positive momentum in MSTR, we think this can work out for the time being. We would consider it to be fairly risky overall. Still, the yield has attracted assets, now near $6B. Indicated yield is now 65.8%, and one-year return 145%. In a 'normal' bitcoin year, the high yield is going to be largely return of capital, and net return will likely be much lower than indicated yield. We think it is a specialized product and certainly needs to be understood. It is not for conservative investors nor investors who 'need' secure income. DFN is a split-share corp., using leverage to enhance yields. Yield is high, but if net asset value drops below a threshold then the dividend simply stops. Five year return (covid recovery) is good at 19.29%, but the fund lost money in 2023, 2020, 2018 and 2015. The dividend record pre-2020 was good but since then the dividend has been halted numerous times. Again, not for conservative investors at all, but it has it fans and recent performance (net) has been solid. HMAX is a newer financial covered call fund. One year performance is 23.51%. Due its sector it is likely safer than the others. Yield is 13.50%. The dividend has been reduced in the past, and some return will be return of capital. There is nothing 'wrong' with these securities: they are doing what they were set up to do. But the phrase 'stable income' in the question may be questionable here. We would certainly expect volatility and not all will be fully sustainable and all have had variances in payouts already.