QDTE NAV Erosion?! NAV Erosion Myth Continues... Total Return = The Ultimate TRUTH

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00:00 Intro
01:12 QDTE
01:57 QDTE Performance
04:15 QDTE vs QQQ
08:16 My QDTE Performance
10:55 Analogy

Main Mission of this Channel:
Empower everyday people to invest on their own. To create a source of Passive Income in order to reach Financial Independence and enhance quality of life.

Primary Content of this Channel:
1) To share my Personal Investing Journey & Strategy with the world by unveiling my entire Portfolio every Month
2) Educate you about Income Oriented Investing with a particular focus on Covered Call ETFs listed on the Canadian & U.S. Stock Markets
3) Keep you informed on the Income Oriented Landscape
4) Interview Fund Managers to get you the correct information straight from the experts

DISCLAIMER:
The videos and opinions on this channel are for informational and educational purposes only and do not constitute investment advice. Adriano Starinieri is not registered to provide investment advice and as such does not provide recommendations - those looking for investment advice should seek out a registered professional. Adriano is not responsible for investment actions taken by viewers.

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[ddelmarsmith]

I think there are different perspectives on how people would define NAV erosion. For example some people dont like to see their initial investment value go down over time after withdrawing the dividends (ie. living off dividends - no re-investment). If they spend all their dividends the remaining price part of total return is down and therefore some people will be uncomfortable with this and see this as erosion of their initial investment. These people would be looking for best of both worlds and QDTE, for example, may not meet their needs. For example, in the case of QDTE, if its price is dropping by $3 to $4 per share every year when the underlying index is going up a lot, some people may be worried the price will continue to erode down to zero. I do agree with you that total return is the best way to view these investments, but in the case of someone who needs to live off ALL the dividends, the decreases in price over time may not be comfortable for them.

[rgenjic]

True that many people talking about NAV erosion really mean a declining stock price. I like the QDTE weekly strategy but would prefer they modify the distributions so that, overall, the stock price stays mostly flat. That price stability lends itself to a better "forever" ETF holding.

[tonynes]

Thanks for explaining this!. I am a bit older in my 60's and have a position in QDTE but I am also putting in other ETFs according to your portfolio. I am following your "great 11."

[Whitetiger]

Yup, correctly mentioned ...again. I bought in Aug & Sep and no erosion after 13 weekly dividend distributions.

[foldreturn]

Thank you for explaining this because since I’m new with these etfs I was paying attention to nav erosion and not liking the drop.

[AlRahman-nirraheem]

Yeah great show, and I got a comment in before the narcissist Joanna ! Great insight!!

[dottherealgam]

if QDTE have NAV erosion, then Defiiance and yieldmax is called NAV sublimation

[marcelmed]

Hello Adriano, one aspect that is not considered in your video. If you fast forward 3 years from now and you decided to sell QDTE. The ETF could be down 30%, it’s down 10% since inception date of March timeframe. One can assume the NAV is headed lower and considering the market is on fire it could easily be down 40 or 50% in a more normal or down market. So now you sell, you invested 100K to purchase QDTE it’s down 30% so now you only collect 70K on your initial 100K investment. It’s very important to consider this 30K NAV erosion hit which was not considered. Now take a 100K purchase of QQQ in the same timeframe, since March it’s up a solid 15-20%. You sell QQQ three years from now and it’s likely well above your 100K initial investment. Include that gain against QDTE overall performance. What that gain would be is very difficult to predict but this is key and cannot be left out of the calculation.

[stevenpaul]

It didn’t recover as well as XDTE because neither did the index. The overnight exposure is uncapped leaving you exposed to downside movements while the upside exposure on the open next day is capped so in extreme volatility environments this methodology may not work as well to recover. Thats why XDTE is doing better as a core holding.

[northshorehighlanders]

The apartment building analogy is exactly what I use/think. it's 100% accurate.

[Snappingttturtlle]

If the nav is going down on a bull market imagine on a bear market. It's the same as tsly. They will have to reverse split it. In the long run.

[husamiammar]

Can you comment on the sustainability of the distribution in long term?

[omatha]

thank you Adrian for your patience and help with us Financially Challenged fellow-fellys! best wishes!

[patrickbelanger]

Me as well, the mention "nav erosion" drives me nuts each time I heard it without proper context. Lots of YouTuber uses the term to scare investors to buy such etfs, and invalidate the passive income investing approach. Amazing video!

[marvinmartian]

A non passive income portfolio requires the selling of shares/units to realize the same income. That's NAV erosion AND share erosion. It compounds to the downside over time.

[marcomarchand]

Great job explaining the fund. Thank you.

[Asstronauts]

it's not eroding its being distributed. if nothing was being sent out AND the price was going down that would be erosion

[thereverendramirez]

income property example is a great analogy! even if your property value goes down over time (-), dont forget the rent you received over that time period (+), minus expenses over time (-), sum all that and u get your TOTAL RETURN! not to mention compounding with drip stocks not incl in example

[torturetuesday]

If there was no nav erosion then it wouldn't continually go down over time. It would gain nav from covered calls over the month then once they pay out the dividend the Nav would drop down to where it was before it started going up from covered calls.

[mmmyeahh]

I dunno but the nav looks pretty good to me on QDTE