ETF Battles: BTCI vs. MSTY - Covered Call Cryptocurrency Clash!
Forget dividends and dusty bond portfolios. Investors are chasing yield in places that you wouldn't even expect, from Tesla options to covered calls to alternative income ETFs on Bitcoin. We got a new generation of income ETFs that are flipping the script on passive income, but is this surge sustainable, or is it just another pitfall? Well, today's ETF battle features an audience-requested matchup between BTCI from NEOS Investments going up against MSTY from YieldMax. So, who wins the battle? Find out right after this.
This is ETF Battles, and I'm Ronda Ley, and it's a delight to have you back. This is the place where we meet to analyze and judge ETFs versus each other. So, send me your ETF matchup request in the comment section below. Be sure to include your exact ETF ticker symbols. And if it's your first time watching, a big warm welcome to you, and be sure to hit that subscribe button to join our community.
Don't forget to check the video description section below. We've got links to our program sponsor, Direction. Besides leverage and inverse choices on broad market indexes, there are lots of choices for ETFs linked to industry sectors along with MAG Seven stocks and single stocks like Nvidia, Palantir, and many others. So, be sure to visit direction.com.
Today's matchup was requested by a viewer named Whippers Snapper 7. This viewer originally requested a quadruple header, but we had to exclude two of the ETFs in the original request due to the fact that they were launched in June and really don't have much in the terms of real-world performance or yield history for us to analyze just yet, but get back to us on that Whippers Snapper 7 for a future battle. Judging today's contest, we've got a duo extraordinaire, John Davy with the Story of Portfolio Advisors, and Athan Ferris with Bloomberg. Guys, welcome back. Great to see you again. >> Hey guys, nice to see you. >> Good to be here.
Our four battle categories are cost, exposure, strategy. We've got performance and yield combined, and then our mystery category where you, our judges, can pick a certain factor or thing that you think is crucial to today's contest. Keep in mind that none of the battle outcomes on this program are ever predetermined or known in advance by myself or our judges. I've got scorekeeping duties. At the end of the show, we'll declare an overall winner, and let's kick things off with the first category, cost. Athan, please get us started.
They're pretty close. You have the NEOS product that has a headline expense ratio of 98 basis points, 99 basis points for the Micro Strategy option one. They're really close, but they both have got they're both pretty good in size. Like you have 5.6 billion in the Micro Strategy product, which is or now it's just strategy. Sorry, it's not Micro Strategy anymore, but that's impressive for a single stock ETF. 500 million in the NEOS one because just because we're so close on the headline, there's a little bit more liquidity. The spread's a little bit tighter on the mic on the strategy one just because it's bigger. It trades a little bit more. So on a total cost taking yield aside, it's a little bit of an edge for the for MSDY. So I'll give that one on a total cost owner total cost of ownership to MSDY. >> Strong start. Thank you, Athan. John, you're up next. How do you see it? >> Nothing more to add, really. I mean, one bit cheaper in management fee, but you know, these are very, very different products. So we'll get into that in a second, but I wouldn't make a decision based on two very different products based on management fee.
That takes us next to exposure strategy, and this is where we get into the details, the nitty-gritty. John, you're still up, so give us your take. >> Yeah, so you know, these are option override ETFs. You know, you're along the line delta. You sell a call option. One's on actual spot Bitcoin, one's on a company that's actually a software company that owns a lot of Bitcoin on their balance sheet. So I mean Bitcoin is an extremely volatile asset. Now you're talking about and that's like an asset class, right, Bitcoin. Now you're talking about a single stock, which single stocks have a lot of idiosyncratic risk, and on top of that, you're sort of taking a software company, cloud software, service, and whatever they do that just happens to own a ton of Bitcoin on their treasury balance sheet. >> Borrowed holdings no less. >> Yeah. I mean, this is very different.
Generally speaking, from my standpoint as a portfolio manager, if you were going to own an asset class, you kind of size it appropriately in your portfolio, and you just say, okay, this is going to be your alpha. So I don't love the fact that you're going to sell call options because I think you kind of clip your upside, but these are two different beasts, but they're all sort of selling the upside. So, do you favor one over the other, or do you dislike them both equally? >> I think from a view standpoint, I would lean on Bitcoin. We own Bitcoin, spot Bitcoin ETFs in our core SMA models, and then we run a real asset strategy both in an SMA and an ETF. And in that, we own spot Bitcoin. So, we don't own an option over an ETF. So, I would lean more on the BTCI from NEOS if I were going to do call overriding. >> Gotcha. Thank you, John. Athan, you're up next. How do you see it when it comes to exposure strategy?
John did all those great points, and this is very for a very specific type of person. And, you know, we were mentioning the fees, this 98 versus 9 basis points. That's really expensive for an ETF, but the industry sort of flipped a little bit. And before it was this big focus on fees. Now, it's this big focus on yield. So like the higher yield you have, this is where flows are going, and you can just see by the discrepancy of the flows, 5.6 billion in the Micro Strategy One versus Bitcoin. But to John's point, they're very different in that with the NEOS product, you're still getting underlying Bitcoin exposure, and you're selling that to the calls. So you're getting some upside. With the other one, your upside is really capped. So it depends what's important to you.
I think a lot of times they'll see this yield, and people just want to go to it, but you have to look at it on a total return basis, which we talk about performance later. So they're a little bit structured differently. I'm lean the reason I would lean towards BTCI because you get the upside exposure along with the income, and you're not idiosyncratic like John was saying on that one stock, and good luck trying to figure out like correlations like you have Micro Strategy that's tied to Bitcoin, but they're holding Bitcoin. It's just like I think a lot of times it's really hard to figure out how this will behave, and people see this siren song of yield. So just be really wary about things that have really, really high yields, how you're getting that income. But I think if I had to pick between the two, obviously understanding the risks with these and what you're giving up, I would lean towards BTCI. I like this a little bit broader. I like that it actually holds a Van ETF, the Bitcoin one under it. So you're still getting some Bitcoin exposure. Like you'll still lag if the market goes up, but you're not lagging by a significant amount. So again, very different, but I would just because of the more broad nature of it, I would pick the NEO's BTCI product.
That takes us next to performance and yield, and Athan, you're still up. So break it down for us. How do these two ETFs compare? >> Yeah, so the yield is very attractive. You might get some different figures, but just using the Bloomberg terminal and look at the most recent payout, you're getting a yield of about 80% on the strategy one and about 27 on BTCI. And I think as you're always going through these products, just keep in mind like this like there's no such thing as free yield, right? And someone would look at it, and sometimes this number hits 100%, and someone will say, "Oh my god, I'm going to double my money by just it doesn't really work like that, right?" And sort of where the yield comes from. Again, it's from selling all these different options, but there's something >> That yield, by the way, just to explain that to our audience. Is that an SEC yield, a 30-day, or what is that based upon? >> Yeah, that was just based on the most recent payment by the current price. So, if you kind of smooth it out, it's probably a little bit closer to 100 for the Micro Strategy product just because it's come it's been down a little bit. It's a little bit closer for 30% for the NEOS product. So they're really hefty yields, right?
You're getting but if you would actually look at the price performance versus total performance of the Micro Strategy One, you'd actually be down on a price basis, but you're up. So which means that all that gain came from income. You're paying taxes on that unless it's an IRA. So I don't want to make any assumption, but just know that that's a very tax inefficient way to get yield. Now there's some things you should be aware of of like return of capital versus just regular dividend distribution. So NEOS will pay some most of it on something called return of capital, which essentially you're not taxed on that like a normal dividend. So you deal with the tax later. Some of the bit the micro strategy one is return of capital, but not all of it. So from a tax efficiency sta...
