unh investment thesis

This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.

Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.

Zacks Rank Should Not Be Confused With ABR

Although both Zacks Rank and ABR are displayed in a range of 1-5, they are different measures altogether.

Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.

It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations. Because of their employers' vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.

On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

Furthermore, the different grades of the Zacks Rank are applied proportionately across all stocks for which brokerage analysts provide earnings estimates for the current year. In other words, at all times, this tool maintains a balance among the five ranks it assigns.

There is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices.

Is UNH a Good Investment?

In terms of earnings estimate revisions for UnitedHealth, the Zacks Consensus Estimate for the current year has remained unchanged over the past month at $27.69.

Analysts' steady views regarding the company's earnings prospects, as indicated by an unchanged consensus estimate, could be a legitimate reason for the stock to perform in line with the broader market in the near term.

The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for UnitedHealth. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

It may therefore be prudent to be a little cautious with the Buy-equivalent ABR for UnitedHealth.

See More Zacks Research for These Tickers

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UnitedHealth Group Incorporated (UNH) - free report >>

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Wall street analysts think unitedhealth (unh) is a good investment: is it.

Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?

Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about UnitedHealth Group (UNH).

UnitedHealth currently has an average brokerage recommendation (ABR) of 1.06, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 25 brokerage firms. An ABR of 1.06 approximates between Strong Buy and Buy.

Of the 25 recommendations that derive the current ABR, 23 are Strong Buy and two are Buy. Strong Buy and Buy respectively account for 92% and 8% of all recommendations.

Brokerage Recommendation Trends for UNH

Check price target & stock forecast for UnitedHealth here>>> The ABR suggests buying UnitedHealth, but making an investment decision solely on the basis of this information might not be a good idea. According to several studies, brokerage recommendations have little to no success guiding investors to choose stocks with the most potential for price appreciation.

Are you wondering why? The vested interest of brokerage firms in a stock they cover often results in a strong positive bias of their analysts in rating it. Our research shows that for every "Strong Sell" recommendation, brokerage firms assign five "Strong Buy" recommendations.

This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.

Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.

Zacks Rank Should Not Be Confused With ABR

Although both Zacks Rank and ABR are displayed in a range of 1-5, they are different measures altogether.

Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.

It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations. Because of their employers' vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.

On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

Furthermore, the different grades of the Zacks Rank are applied proportionately across all stocks for which brokerage analysts provide earnings estimates for the current year. In other words, at all times, this tool maintains a balance among the five ranks it assigns.

There is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices.

Is UNH a Good Investment?

In terms of earnings estimate revisions for UnitedHealth, the Zacks Consensus Estimate for the current year has remained unchanged over the past month at $27.69.

Analysts' steady views regarding the company's earnings prospects, as indicated by an unchanged consensus estimate, could be a legitimate reason for the stock to perform in line with the broader market in the near term.

The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for UnitedHealth. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

It may therefore be prudent to be a little cautious with the Buy-equivalent ABR for UnitedHealth.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report

To read this article on Zacks.com click here.

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What Is an Investment Thesis?

Investing is a process. One important task an investor should perform before putting money into an opportunity is to develop an investment thesis. An investment thesis is a written analysis laying out the case for why an investment opportunity should generate a compelling return.

Here's a closer look at how to build an investment thesis and why it's essential to create one. 

The importance of creating an investment thesis

Many people make the mistake of investing their hard-earned money into opportunities they don't fully understand. Maybe they received a tip on a hot stock at a party or got caught up in the frenzy of  meme stocks  and  cryptocurrencies on social media. Perhaps that investment has now lost value, and they're not sure whether they should buy more , sell , or continue holding .

An investment thesis can help solve this problem. By creating a thesis on why you believe an investment will deliver an attractive return, you can use it as a guide to determine your next step when the investment experiences a large decline or some disturbing news emerges. You can measure those factors against the original thesis to see if it remains intact.

If the thesis hasn't changed, you can continue holding or potentially increase your investment. However, if you found that the thesis is busted, you can sell your investment and move on.

How to write an investment thesis

It's important to take the time to write a well-thought-out and thoroughly researched investment thesis. That will allow you to easily make sense of it for future reference. Here are four easy steps for writing an investment thesis.

Identify the underlying catalyst at play

The first step in writing an investment thesis is to determine and then outline the catalyst driving your investment thesis. For example, are you interested in the long-term upside from a  secular trend  or  economic supercycle , or a shorter-term rebound from the economic  cycle  or a  bear market ? Write out the primary reason you believe this investment has attractive upside potential.

Assess how the investment is positioned within the catalyst

Next, look at how the particular investment opportunity compares to others that benefit from the same catalyst. Is it the largest  publicly traded company  focused on this opportunity? Smaller but with more upside potential? Does it align with a particular  long-term investment strategy ? Will it help you with  balancing your portfolio ? Write out why this investment is a solid choice to benefit from this catalyst.

Consider the biggest risks 

As the saying goes, the best-laid plans often go awry. That's why it's vital to consider what will happen to this particular investment opportunity if something goes wrong. Some examples to consider:

• Can it withstand a recession ?
• Could Congress enact legislation that would damage its prospects?
• Is there a lot of competition within the industry?
• Does it have too much debt, volatile cash flows, or an otherwise weaker financial profile?
• Is the price high? Could that result in underperformance if the catalyst doesn't play out according to plan?

Consider and jot down anything that could negatively impact this investment.

Determine your conviction level

Finally, write down your expected return from this investment and how much conviction you have in its ability to achieve that return. Then, given the catalyst, its position within that catalyst, the risk/reward profile, and your conviction level, is it worth the investment?

By going through these steps and writing a detailed investment thesis, you can proceed with confidence. Further, you can reference it in the future to ensure your thesis is playing out as expected. If not, you can make changes to your investment.

Investment thesis examples

An investment thesis doesn't need to be that long. It just needs to contain the most important factors driving your decision to invest in a particular opportunity. Here's a simplified example based on my investment thesis for Brookfield Renewable  ( BEP -0.35% )( BEPC 0.76% ), one of my largest holdings:

Renewable energy is one of the biggest megatrends of our lifetimes. It will take the global economy three decades and more than $100 trillion of investment to transition its primary power source from fossil fuels to renewable energy.

One of the leaders in this energy transition is Brookfield Renewable. It has one of the largest globally diversified renewable energy platforms and an even bigger pipeline of development projects. Brookfield also has an extensive track record of creating value from the sector, including two decades of steady income and dividend growth , driving superior performance.

Brookfield is also well positioned to navigate the biggest risk facing the industry — access to low-cost capital to finance capital-intensive development projects — due to its rock-solid financial profile backed by a top-notch balance sheet. Given Brookfield's position within this megatrend and its historical success, I have high conviction that it can deliver market-beating total returns for years to come and would consider adding to my position on any meaningful price decline.

This example succinctly lays out the catalyst (the renewable energy megatrend), the investment opportunity's position in the trend (Brookfield is a global leader), its ability to withstand risks (Brookfield has a top-tier financial profile), and my conviction level (high).

An investment thesis isn't just for stocks ; you can craft one for any investment opportunity you're contemplating. For example, you might have the opportunity to invest in a new business venture or a private company. To write an investment thesis for a venture capital or private equity opportunity, you would follow the same outline.

Here's a simplified investment thesis for a new coffee shop:

People love coffee . Demand for the brewed beverage is on track to grow at a more than 8% annual rate through 2025, according to Statista. It also notes that, by 2025, 84% of coffee spending and 21% of the volume consumed will be outside the home. That growing market will benefit coffee shops.

This particular shop would be the first one in a trendy area of downtown that's undergoing a dramatic revitalization. While restaurant retail can be brutal, the group starting the coffee shop has opened several profitable locations around the city in recent years. Their past success, when combined with the coffee industry's growth, suggests this new shop should thrive. Because of that, you have a high conviction that this investment will earn a much greater return than if you invested the money in another retail opportunity. 

With this venture capital investment thesis we've:

• Identified the catalyst: Growing demand for out-of-home coffee consumption.
• Classified this particular investment opportunity's position within the catalyst: First mover in a trendy area.
• Determine all the risks facing this venture: Retail is brutal.
• Considered the conviction level: High compared to other retail opportunities.

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An investment thesis can make you a more successful investor

Thinking through and crafting a thoroughly researched investment thesis can help you make better informed investing decisions. While it's best to write one before you invest, you can also create one for existing holdings. The investment thesis will serve as a guide allowing you to measure whether the opportunity is living up to your thesis — suggesting you hold or buy more — or if that's no longer the case, and it's time to sell.  

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What Is an Investment Thesis?

• Understanding the Thesis

Special Considerations

• What's Included?

The Bottom Line

• Portfolio Management

Investment Thesis: An Argument in Support of Investing Decisions

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

The term investment thesis refers to a reasoned argument for a particular investment strategy, backed up by research and analysis. Investment theses are commonly prepared by (and for) individual investors and businesses. These formal written documents may be prepared by analysts or other financial professionals for presentation to their clients.

Key Takeaways

• An investment thesis is a written document that recommends a new investment, based on research and analysis of its potential for profit.
• Individual investors can use this technique to investigate and select investments that meet their goals.
• Financial professionals use the investment thesis to pitch their ideas.

Understanding the Investment Thesis

As noted above, an investment thesis is a written document that provides information about a potential investment. It is a research- and analysis-based proposal that is usually drafted by an investment or financial professional to provide insight into investments and to pitch investment ideas. In some cases, the investor will draft their own investment thesis, as is the case with venture capitalists and private equity firms.

This thesis can be used as a strategic decision-making tool. Investors and companies can use a thesis to decide whether or not to pursue a particular investment, such as a stock or acquiring another company. Or it can be used as a way to look back and analyze why a particular decision was made in the first place—and whether it was the right one. Putting things in writing can have a huge impact on the direction of a potential investment.

Let's say an investor purchases a stock based on the investment thesis that the stock is undervalued . The thesis states that the investor plans to hold the stock for three years, during which its price will rise to reflect its true worth. At that point, the stock will be sold at a profit. A year later, the stock market crashes, and the investor's pick crashes with it. The investor recalls the investment thesis, relies on the integrity of its conclusions, and continues to hold the stock.

That is a sound strategy unless some event that is totally unexpected and entirely absent from the investment thesis occurs. Examples of these might include the 2007-2008 financial crisis or the Brexit vote that forced the United Kingdom out of the European Union (EU) in 2016. These were highly unexpected events, and they might affect someone's investment thesis.

If you think your investment thesis holds up, stick with it through thick and thin.

An investment thesis is generally formally documented, but there are no universal standards for the contents. Some require fast action and are not elaborate compositions. When a thesis concerns a big trend, such as a global macro perspective, the investment thesis may be well documented and might even include a fair amount of promotional materials for presentation to potential investing partners.

Portfolio management is now a science-based discipline, not unlike engineering or medicine. As in those fields, breakthroughs in basic theory, technology, and market structures continuously translate into improvements in products and in professional practices. The investment thesis has been strengthened with qualitative and quantitative methods that are now widely accepted.

As with any thesis, an idea may surface but it is methodical research that takes it from an abstract concept to a recommendation for action. In the world of investments, the thesis serves as a game plan.

What's Included in an Investment Thesis?

Although there's no industry standard, there are usually some common components to this document. Remember, an investment thesis is generally a proposal that is based on research and analysis. As such, it is meant to be a guide about the viability of a particular investment.

Most investment theses include (but aren't limited to) the following information:

• The investment in question
• The investment goal(s)
• Viability of the investment, including any trends that support the investment
• Potential downsides and risks that may be associated with the investment
• Costs and potential returns as well as any losses that may result

Some theses also try to answer some key questions, including:

• Does the investment align with the intended goal(s)?
• What could go wrong?
• What do the financial statements say?
• What is the growth potential of this investment?

Putting everything in writing can help investors make more informed decisions. For instance, a company's management team can use a thesis to decide whether or not to pursue the acquisition of a rival. The thesis may highlight whether the target's vision aligns with the acquirer or it may identify opportunities for growth in the market.

Keep in mind that the complexity of an investment thesis depends on the type of investor involved and the nature of the investment. So the investment thesis for a corporation looking to acquire a rival may be more in-depth and complicated compared to that of an individual investor who wants to develop an investment portfolio.

Examples of an Investment Thesis

Portfolio managers and investment companies often post information about their investment theses on their websites. The following are just two examples.

Morgan Stanley

Morgan Stanley ( MS ) is one of the world's leading financial services firms. It offers investment management services, investment banking, securities, and wealth management services. According to the company, it has five steps that make up its investment process, including idea generation, quality assessment, valuation, risk management , and portfolio construction.

When it comes to developing its investment thesis, the company tries to answer three questions as part of its quality assessment step:

• "Is the company a disruptor or is it insulated from disruptive change? 
• Does the company demonstrate financial strength with high returns on invested capital, high margins, strong cash conversion, low capital intensity and low leverage? 
• Are there environmental or social externalities not borne by the company, or governance and accounting risks that may alter the investment thesis?"

Connetic Ventures

Connetic Adventures is a venture capital firm that invests in early-stage companies. The company uses data to develop its investment thesis, which is made up of three pillars. According to its blog, there were three pillars or principles that contributed to Connetic's venture capital investment strategy. These included diversification, value, and follow-on—each of which comes with a pro and con.

Why Is an Investment Thesis Important?

An investment thesis is a written proposal or research-based analysis of why investors or companies should pursue an investment. In some cases, it may also serve as a historical guide as to whether the investment was a good move or not. Whatever the reason, an investment thesis allows investors to make better, more informed decisions about whether to put their money into a specific investment. This written document provides insight into what the investment is, the goals of the investment, any associated costs, the potential for returns, as well as any possible risks and losses that may result.

Who Should Have an Investment Thesis?

An investment thesis is important for anyone who wants to invest their money. Individual investors can use a thesis to decide whether to purchase stock in a particular company and what strategy they should use, whether it's a buy-and-hold strategy or one where they only have the stock for a short period of time. A company can craft its own investment thesis to help weigh out whether an acquisition or growth strategy is worthwhile.

How Do You Create an Investment Thesis?

It's important to put your investment thesis in writing. Seeing your proposal in print can help you make a better decision. When you're writing your investment thesis, be sure to be clear and concise. Make sure you do your research and include any facts and figures that can help you make your decision. Be sure to include your goals, the potential for upside, and any risks that you may come across. Try to ask and answer some key questions, including whether the investment meets your investment goals and what could go wrong if you go ahead with the deal.

It's always important to have a plan, especially when it comes to investing. After all, you are putting your money at risk. Having an investment thesis can help you make more informed decisions about whether a potential investment is worth your while. Make sure you put your thesis in writing and answer some key questions about your goals, costs, and potential outcomes. Having a concrete proposal in place can spell the difference between earning returns and losing all your money. And that's if your thesis supports the investment in the first place.

Harvard Business School. " Writing a Credible Investment Thesis ."

Lanturn. " What is an Investment Thesis and 3 Tips to Make One ."

Morgan Stanley. " Global Opportunity ."

Medium. " The Data That Built Our Fund's Investment Thesis ."

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Home > STUDENT > HONORS

Honors Theses and Capstones

Theses/dissertations from 2024 2024.

Harnessing pDNA Hydrogels for Cell-Free mRNA Synthesis , Rachel A. Achong

From IT to AI: Analysis of Skill–Biased Technological Change in Europe , Stav Alkalay

Density Dependent Calling Behavior in North Pacific Humpback Whales , Lucas J. Anderson

Assessment of Open Top Chambers to Simulate Effects of Climate Change on Soil Temperature and Cover Crop Response in Agricultural Systems , Gretchen Bahmueller

Investigating Roles of Protein Phosphatase Subunits in the Arabidopsis Root Response to Salt Stress , Casey P. Baumann

Investigating the Function of Protein S-acyltransferase 2 in Arabidopsis thaliana using CRISPR Mutants , Nicole Benjamin

Consumer Preference in Politics: Polarization in the US Two-Party System , Jocelyne Y. Bisson

Exploring the Evolutionary Dynamics of the p53 Gene in Ecdysozoans: Implications for Cancer Biology and Genetic Regulation , Joseph Brian Bodenrader

Equine Rescue Success in the United States: A Statistical Analysis , Carly J. Cave

Imputation Strategies for Different Categories of Missing Data , Karthik Chalumuri

Intergenerational Comparison of Inequality and Standard of Living , Jillian Cookinham

Understanding Neurodiversity and Executive Disfunction to Discover More Effective Accommodations and Create a More Inclusive Workforce for Neurodivergent Individuals , Carley Dahlstrom

A free-boundary successive over-relaxation Grad-Shafranov Equation Solver , Alec J. Damsell

Inclusivity of In Vitro Fertilization Clinic Websites , Erin Donahue

Understanding Hospital-Based Nurse End-of-Life Care, Knowledge, and Comfort: A Quality Improvement Project , Emma Doran

Looking for the Answer: Exploring the Choice Between AI and Search Engines , Joseph Driscoll

Utilizing Plasmid DNA Hydrogels for Cell-Free Protein Production , Tinotenda Duche

Fluorotelomer Carboxylic Acid Degradation: Implications for Septic Systems , Alexis Marie Eaton

Cataloging and Locating Icequakes on the Ross Ice Shelf, Antarctica to Determine Long Term Rift Behavior , Simon F. Eisl

The Economic Impacts of Digital Nomads in Medellin, Colombia , Bernadette Patricia Farmer

Financial Considerations for U.S. Equine Rescues: A Comparison of Adoption-based vs. Sanctuary-based Organizations , Carolyn V. Frank

Implementation of the Dutch Biking System In The United States Subject: Portsmouth NH , Linda K. Freeman

Giving Workers the 'Green Light': Defining Green Jobs and Exploring their Distribution in the US , Cole Fuller

Comparing Calcium, Vitamin D, and Calorie Intakes Among UNH Army ROTC Cadets with Low and Normal Bone Mineral Status , Ava Gaudette

Tender Bonds: The Effect of Emotions and Parenting Styles on Rule-Violating Behaviors , Courtney K. Goodwin and Ellen Cohn

Distribution of Tick Species on Free-ranging Ungulates in Northern New England , Karisa Graham

National Park Visits and Climate: Are rising temperatures affecting visitation rates? , Olivia Graves-Witherell

A Review of Executive Functioning and Social Communication Supports for Neurodiverse College Students , Reilly Morgan Gray

Instances of Undecidability in the Semigroup Word Problem , Timothy C. Grosky

Land Analysis of a 33 Acre Parcel in Deerfield, NH , Chloe C. Gross

The Inflation Reduction Act’s Role in Shaping Pharmaceutical Investment Strategies , Grace Harbour

Investing in Love: The Finances of Getting Married , Allison Frances Ivers

Global Analysis of the Neutron Magnetic Form Factor , Joseph P. Jayne

Nursing Education and Comfort Level in Caring for Patients with Eating Disorders , Jaylyn E. Jewell

Analysis on the Correlation of ESG Exposure Ratings on ETF Performance , Brendan C. Kelly

Prospective Associations of Fish Consumption in Cognitive Function and Depressive Symptoms Among Puerto Rican Adults , Johanna Grace Koroma

Seasonality of Red Oak (Quercus rubra) Leaf Trait Changes Across a Canopy Height Gradient , Arielle Ann Kotulak

Environmental Taxation in Spain: Policy and Practice , Emily Sang Lynch

Artificial Intelligence in Stock Analysis and Portfolio Building , Sean M. Lynch

College Sports as a Business: How Name, Image, & Likeness Deals Have Altered the Way Colleges Operate , Jake Alexander MacInnis

Floating Offshore Wind Turbine Analysis and Discovery , Payton Maddaloni

Floating Offshore Wind Turbine Analysis and Discovery , Payton Summer Maddaloni

Securing Internet of Things (IoT) Data Storage , Savannah Malo

Investigation of the Causative Agent of Canine Leproid Granuloma Infection Cases in the Northeastern United States , Nicole J. Marcotte

Alpaca Assisted Activities in the New England Alpaca Industry: A Possible Solution to Farm Profitability and Participant Mental Health , Ashley Michele Masse

Artificial Intelligence and the Entertainment Industry , Caroline Rae McCarthy

Student Perspectives on the Adequacy of Mental Health Curriculum within the College of Health and Human Services at UNH , Brianna Lee Meyer

The Future of Building: The Potential Impacts of 3D Printing Within the Construction Industry , Alyssa Morrison

Understanding Large Accounting Firm Perceptions on the Decline of Accounting Graduates and Implications of Supply Shortages , Lilie Murray

Judging Our New Judges: Why We Must Remove Artificial Intelligence from Our Courtrooms Now , Kieran Duffy Newcomb

“Slaves of the State:” the Exploitation of Women Through Convict Leasing , Beth F. Newton

The Lighthouse Keepers Daughter: The Life and Work of Celia Laighton Thaxter , Haley J. Parker

Social Workers in Human Resources , Alexandra H. Pogany

Non-Invasive Monitoring Device for Early Detection of Breast Cancer Related Lymphedema , Amy Prendergast

Exploring Lexical Stress Perception: An Investigation Across Varied Listener Experience with Prosody , Olivia J. Pride

Supply and consumption of dissolved organic phosphorus across the subtropical Indian Ocean , Corinne Richard

Developing a Gender Diverse Stimulus Set for Emotion Expressions , Amir Robertson

Does Hookup Culture Silence Women? , Kylee Rose Rock

Do Duckweeds Adapt to Water and Microbes? , Ava M. Rose

Investigation of the Effects of Ocean Acidification on Juvenile Homarus americanus Feeding Behavior , Sophia Roy

Impact of HDAC Inhibitors on the Efficiency of Cardiomyocyte Differentiation , Lauren Mary Sargent

Unsung Heroes in Conservation: Evaluating the Limitations Faced by New England Wildlife Rehabilitation Centers and Proposing Solutions for their Support and Recognition , Shaylee M. Sarmiento

Feminist Environmental Ethics: A Modern, Intersectional Approach , Suzanne E. Scharff

The Influence of DRD2 Polymorphism Exon 8 C/T (rs6276) on Manifestations of Delirium Tremens & Alcohol Withdrawal Seizures , Naomi Schneider

The Effect of Phase-Separated Microstructures on Cell Migration in 3D Dextran Hydrogels , Jenifer Sidhwa

Investigation of Charge Density Waves and Layer Stacking in Niobium Ditelluride , Gavin J. Smith

The Expansion of Language Interpretation Services Post-Executive Order 13166: Effects on Maternal and Fetal Outcomes of Non-English-Speaking Patients , Lilly Annabelle Smith

Defensive Impact Wins: Developing a New Method to Rate Individual Defense in NBA Games , Dylan J. Stiles

Distribution and Diagnosis of Listeria monocytogenes in New England from 2016-2023 , Diana Caroline Stover

How World’s Fairs Conceive of the Future During Times of Turmoil , Mikayla Lauren Tilden

Hohenschönhausen as a Tangible Representation of the German Democratic Republic’s Development of Operative Psychology , Zoe Werth

A New Industry For Student- Athletes: An Analysis of NIL Implications on Well-being and Team Dynamics , Jamison W. White

Implementation of Stronger Community Resilience in the United States Before Natural Disasters Strike , Andrew J. Widdekind

The Continuation of Thoroughbred Racing: A Dual Mission , Isabella V. Williams

Investigating the Relationship between Politics and Education , Alaina M. Winrow

Theses/Dissertations from 2023 2023

Individual Behavioral and Neurobiological Markers Associated with a Vulnerable to Ethanol use Phenotype , Kelsey M. Alimandi

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QYLD Is Great For Income, But I Have Turned Neutral On This 11.63% Yielding ETF

• QYLD is a strong income-generating ETF but has limited upside potential due to its covered call strategy, leading to a perpetual share price decline.
• I am now neutral on QYLD, preferring ETFs like QQQI and JEPQ that allow for some capital appreciation while generating income.
• Despite QYLD's price erosion, it has achieved its goal of consistent monthly distributions, producing 98.82% of its initial share price in income.
• QYLD remains a pioneer in covered call ETFs, but evolving strategies in other funds offer more balanced income and appreciation opportunities.

Global X has been a pioneer in the covered-call ETF space, and the Global X Nasdaq 100 Covered Call ETF ( NASDAQ: QYLD ) is considered its flagship with $7.96 billion in net assets. Global X was managing covered calls ETFs well before they became popular, and it has been synonymous with generating double-digit yields for years. From an income investment perspective, QYLD has continued to perform throughout the years, even if the share price has been in a perpetual decline. When it comes to QYLD, there has always been a debate about its viability due to the fund's mechanics. Global X is extremely clear that QYLD is geared toward investors looking to generate income through writing covered calls rather than discussing generating capital appreciation. I am now neutral on QYLD rather than being bullish because the sector for covered call ETFs has evolved, and I like some of the other strategies more. They leave more room for appreciation, as the entire fund isn't capped. QYLD is still a strong fund for income, but if we get a rally from rate cuts, it is likely to underperform similar high-income funds.

Seeking Alpha

Following up on my previous article about QYLD

In my previous article about QYLD, I discussed why the opportunity cost of an appreciating market may not outweigh the needs of an income-focused investor when it comes to QYLD ( can be read here ). Since the article was written on April 10th, the S&P 500 has appreciated by 8.21%, and QYLD has declined by -0.84%. QYLD has generated monthly income, and when the distributions are taken into consideration, its total return is 4.13%. I am following up with a new article to discuss why I am no longer bullish on QYLD, and downgrading my investment thesis to neutral. I think QYLD is a solid fund for income investors who can tune out the noise and not look at the fluctuating share price and just focus on the income being generated. The covered call space has evolved, and I think there are other funds that are more appealing than QYLD.

Risks to my investment thesis

While I am still a shareholder of QYLD, I am no longer as bullish as I once was. There are several risks to my investment thesis and to my own investment in QYLD. It's been over a decade since QYLD went public and shares have declined by -28.96% despite the Nasdaq climbing 377.54%. Investors could continue to see price erosion or a stagnant share price as the Nasdaq potentially benefits from tailwinds from rate cuts. QYLD has tremendous opportunity costs because of its covered call strategy, and while investors are allocating capital toward QYLD for income, opportunity costs are real risks. The other main risk is that QYLD's income fluctuates, and there is a risk that future distributions won't be as large as previous ones. Ultimately, QYLD has lived up to its investment thesis and opinions vary if the fund's structure has been a net positive for investors. QYLD could continue to underperform the market, and its future income could be impacted. Investors should consider the risks because this is a unique fund with a dedicated strategy for the specific outcome of generating income.

The facts are that QYLD has lived up to its investment objectives for its shareholders

Everyone has an opinion, and whether QYLD is a good investment depends on an individual's goals. QYLD invests in the companies that create the Nasdaq 100 index, then writes covered calls against the positions to generate income. The fund has a specific objective to generate immediate recurring income by selling either at the money or close to the money covered calls each month. QYLD trades most of the potential upside for an upfront premium, which is paid to shareholders on a monthly basis in the form of distributions. The income generated by the distributions fluctuates each month as the premiums in the options markets constantly change. QYLD is currently yielding 11.63% based on the TTM distributions, and despite what the bears think about the mechanics, QYLD has outpaced the risk-free rate of return since its inception.

QYLD went IPO on 12/16/13 at $25 and has never missed a monthly distribution . Currently, shares of QYLD trade for $17.76, which is a decline of -$7.24 or -28.96%. Long-term investors have endured capital appreciation since its inception as QYLD has spent minimal time above $25. Over this period, QYLD has paid 128 monthly distributions and generated $24.71 of income throughout the years. QYLD has paid 98.82% of its initial share price in income over the years while generating a 69.86% ROI since inception when accounting for the distributed income. While the share price has declined, QYLD has never claimed it was constructed to generate capital appreciation. Based on QYLD's goals, the primary objective is being achieved despite a declining share price.

Some will argue that the opportunity cost of underperforming the market isn't worth it while others will cite that they would have an income-producing asset still operating at 100% that has generated 98.82% of the initial investment in income. This is an investment that is very specific in its objectives, and who should consider allocating capital toward it. The bears would be correct in saying that despite the income generated, QYLD's share price over time has declined despite being in a long-term bull market cycle. Bulls would be correct in saying that despite the declining share value, income is being generated each month without having to deplete their share count by selling each month.

Steven Fiorillo, Global X

Why I am turning neutral on QYLD

There is no question that QYLD has been a strong income-producing asset for more than a decade, but its strategy hasn't evolved. By selling covered calls at the money or close to the money, QYLD hasn't been able to capitalize on the perpetual bull market of the past decade. The disconnect between QYLD and QQQ has only increased over time. It has been frustrating that when the market sells off, it's often hard for QYLD to rebound because it's writing new covered calls very close to where the current share price is, which caps the upside potential when the market rebounds. When the market crashed in 2022, the drawdown in QQQ was significantly more drastic than in QYLD, but QQQ ultimately rebounded and made new highs whereas QYLD didn't. This is because investors are sacrificing all forms of upside appreciation, whether it's making new highs or rebounding off of a sell-off for immediate income.

If you're willing to sacrifice upside appreciation for income, then QYLD has a fantastic track record of consistently generating double-digit annual yields. I am invested in QYLD, but I am not adding to my position. At this point, I prefer the structure from the NEOS Nasdaq-100 High Income ETF ( QQQI ) or the JPMorgan Nasdaq Equity Premium Income ETF ( JEPQ ) more. QQQI utilizes a call option spread strategy where it writes covered calls to generate income and uses some of the premium to purchase out-of-the-money calls to participate in some upside if there is a strong rally in the market. JEPQ invests 80% of its assets in the Nasdaq 100 while utilizing up to 20% for ELN's. JEPQ deploys a covered call strategy within the ELN portion of the portfolio while leaving the investments in the Nasdaq 100 uncapped. While it's not much, QQQI and JEPQ have both outperformed QYLD over the past year on price appreciation. QQQI is on pace to generate about a 14% yield for its first year as an ETF, and JEPQ has generated a 9.3% yield over the TTM. I have been adding to JEPQ and QQQI rather than QYLD over the recent months.

QYLD will always be a pioneer in the covered call ETF space that has never missed a distribution. Despite the price erosion, QYLD has produced 98.82% of its initial share price from distributions, and long-term investors still have an income-producing asset in their hands, churning out monthly payments. As the income space for ETFs evolved, other funds, such as JEPQ and QQQI, have become more interesting. I am still a shareholder of QYLD and reinvest the distributions each month, but I am no longer bullish as some of the other strategies are more aligned with what I am looking for in an income-producing fund. I am ok giving up most of the upside to generate income, but I do want to benefit as the markets appreciate, and QYLD's strategy is more constricted than other ETFs that are able to produce similar yields. At this point, I would just hold QYLD, as there are other funds out there that have taken a hybrid approach to try and achieve a dual outcome.

This article was written by

Analyst’s Disclosure: I/we have a beneficial long position in the shares of QYLD, JEPQ, QQQI either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Disclaimer: I am not an investment advisor or professional. This article is my own personal opinion and is not meant to be a recommendation of the purchase or sale of stock. The investments and strategies discussed within this article are solely my personal opinions and commentary on the subject. This article has been written for research and educational purposes only. Anything written in this article does not take into account the reader’s particular investment objectives, financial situation, needs, or personal circumstances and is not intended to be specific to you. Investors should conduct their own research before investing to see if the companies discussed in this article fit into their portfolio parameters. Just because something may be an enticing investment for myself or someone else, it may not be the correct investment for you.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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