YETH: Fails To Achieve Its Goals Despite An Ether Outperformance

Summary Roundhill Ether Covered Call Strategy ETF fails to deliver on its objective of tracking ether and providing meaningful income. YETH's synthetic long options strategy significantly underperforms ether spot ETFs like ETHA, with only 8.9% return versus ETHA's 83% over the past ￰0￱ fund's high 0.95% expense ratio and poor structuring result in NAV erosion and misleadingly high distribution ￰1￱ YETH and consider ETHA for direct ether exposure and better total return ￰2￱ We recently reviewed a very robust and well-structured fund from Roundhill, namely the Roundhill PLTR WeeklyPay ETF ( PLTW ). In that article we praised the asset manager on the fund and its ￰3￱ we are going to tackle a different name from Roundhill, but one that sits at the opposite side of the spectrum, unfortunately.

Today's article will deal with the Roundhill Ether Covered Call Strategy ETF ( YETH ), and will highlight why we are of the opinion the fund fails to achieve its ￰4￱ does YETH actually do? Let us start by looking at the fund objective: The Roundhill Ether Covered Call Strategy ETF (“YETH”) seeks to offer exposure to ether*, subject to a cap, while providing the potential for current ￰5￱ is an actively-managed ￰6￱ is therefore a name that aims to extract dividends from ether's ￰7￱ investor always has to keep in mind that such a fund, by design, is supposed to follow the total return provided by the underlying ￰8￱ investor can always just buy ether outright via the iShares Ethereum Trust ETF ( ETHA ), and the only reason to go long on a name like YETH is to capitalize on constant gains harvesting, to the extent the fund is correctly ￰9￱ employs a synthetic long structure via options A fund can achieve dividends from an underlying asset via various strategies: hold the asset and write covered calls do a total return swap with a bank use a synthetic long A synthetic long position is a financial strategy that is constructed to replicate the exact payoff and risk profile of owning the underlying asset without actually buying the asset ￰10￱ one can structure a robust synthetic long, and one can structure a poor synthetic ￰11￱ getting too much into financial engineering terms, let us give you a flavor of the YETH holdings: Holdings (Fund Website) The fund uses the ProShares Ether ETF ( EETH ) and the iShares Ethereum Trust ETF ( ETHA ) as building ￰12￱ tracks spot ether, while EETH aims to track ether via futures: Data by YCharts We can see a divergence in performance recently between a construct using futures and one using the spot reference ￰13￱ the end of the day, as a retail investor, you do not need to know too much about how to build a synthetic long, but only observe if the manager is actually doing a good ￰14￱ us have a look at how it works for this ￰15￱ - large basis Now that we have established what the fund aims to do and how it is built, let us see if it manages to achieve its goal: Data by YCharts The above chart is a total return graph for the three ETFs in the past ￰16￱ note that YETH is astoundingly far off from the ether building blocks.

A good dividend extractor would see a total return in a +/-10% band when benchmarked against the underlying ￰17￱ have a basis of 60% to 74% ￰18￱ is this possible? Poor ￰19￱ synthetic long employed does not work well when benchmarked against an actual ether ￰20￱ note YETH retained all the downside from January 2025 to April 2025 but lagged significantly during an up ￰21￱ 0.95% in fees, this fund should do much, much ￰22￱ note the ETF, just like any buy write fund on a volatile asset, shows very large distribution rates (60% currently). Ignore these figures since they are ￰23￱ ETF has seen a significant NAV erosion, which has not been compensated enough by the ￰24￱ fact, in the past year the ETF has mustered a total return of only 8.9% when ether spot is up roughly 83%!

What can an investor do here? Well, to put it succinctly, just don't buy YETH and buy ETHA ￰25￱ investor can construct the dividend profile she/he desires via an outright purchase and small sales each ￰26￱ us go through an example: you purchase $1,000 worth of ETHA after 1 month the position is up +12%, and you have $1,120 in your account you can just outright sell $120 worth of stock and give yourself a 144% annualized dividend rate (multiply 120 by 12 to annualize it and divide by 1000) The takeaway here is that extracting dividends from an asset is not that hard; it just takes very active ￰27￱ a fund that should do that for you is an alternative, but only when it actually achieves that ￰28￱ you that YETH could do just what we outlined above, but then it would be hard pressed to charge you 0.95% for ￰29￱ it employs a complex options strategy, which just fails to achieve its ￰30￱ YETH is an exchange-traded fund that aims to track ether and extract dividends from its ￰31￱ name uses a complex synthetic long options strategy but fails to achieve its stated ￰32￱ via ETHA is up almost +83% in the past year, while YETH has posted a paltry +8.9% ￰33￱ structuring here is not great, and it should be ￰34￱ ETF charges a 0.95% expense ratio for this ￰35￱ we are sanguine ether into the year's end, we find YETH to be a poor vehicle to express that ￰36￱ YETH and buy ETHA instead.