YieldMax Magnificent 7 Fund of Option Income ETFs (YMAG): Is the 25% Yield for Real?

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The stocks in the Magnificent Seven are known to be powerful performers in the 2020s. However, they offer either a tiny dividend or no dividend at all. What are yield hunters supposed to do, then?

The solution may be an exchange traded fund (ETF) called the YieldMax Magnificent 7 Fund of Option Income ETFs (NYSEARCA:YMAG). It seeks to generate extra income from the “Mag 7” stocks, and the YMAG ETF’s distribution rate is certainly tempting.

On the other hand, it’s crucial to know what’s in the YieldMax Magnificent 7 Fund of Option Income ETFs and how it derives passive income for investors. Plus, you’ll definitely want to understand the risks before considering a share position. Only then can you make a fully informed investment decision about the YMAG ETF.

Breaking Down the YMAG ETF

Let’s start off with the most basic question: What’s in the YieldMax Magnificent 7 Fund of Option Income ETFs? There’s a little bit of cash and “other” assets as well as a small investment in a government-bond-focused mutual fund called the First American Government Obligations Fund (FAAXX).

For the most part, though, the YieldMax Magnificent 7 Fund of Option Income ETFs takes a “fund of funds” approach by investing in seven YieldMax covered call ETFs. As you probably have figured out by now, these seven funds are based on the Magnificent Seven group of stocks.

Here’s the breakdown of the main holdings in the YMAG ETF, the underlying stocks they’re based on, and their respective weightings:

• Yieldmax Meta Option Income Strategy ETF (NYSEARCA:FBY); based on Meta Platforms (NASDAQ:META) stock; 14.85% weighting in YMAG ETF
• YieldMax NVDA Option Income Strategy ETF (NYSEARCA:NVDY); based on NVIDIA (NASDAQ:NVDA) stock; 14.77% weighting
• YieldMax GOOGL Option Income Strategy ETF (NYSEARCA:GOOY); based on Alphabet (NASDAQ:GOOGL) stock; 14.33% weighting
• YieldMax AAPL Option Income Strategy ETF (NYSEARCA:APLY); based on Apple (NASDAQ:AAPL) stock; 14.03% weighting
• YieldMax MSFT Option Income Strategy ETF (NYSEARCA:MSFO); based on Microsoft (NASDAQ:MSFT) stock; 13.96% weighting
• Yieldmax TSLA Option Income Strategy ETF (NYSEARCA:TSLY); based on Tesla (NASDAQ:TSLA) stock; 13.38% weighting
• Yieldmax AMZN Option Income Strategy ETF (NYSEARCA:AMZY); based on Amazon (NASDAQ:AMZN) stock; 13.18% weighting

Thus, the YieldMax Magnificent 7 Fund of Option Income ETFs provides exposure to seven famous stocks that have generally performed well in the 2020s. As we’ll discover in a moment, however, the YMAG ETF doesn’t directly invest in the stocks of NVIDIA, Apple, Microsoft, and so on.

How YMAG Generates Big Yield

What makes the YieldMax Magnificent 7 Fund of Option Income ETFs so tempting for passive income investors is the fund’s huge yield. Impressively, the YMAG ETF currently advertises an expected annual distribution rate of 25.21%.

Not only that, but the YieldMax Magnificent 7 Fund of Option Income ETFs pays out its cash distributions to investors on a weekly basis. Hence, the YMAG ETF will attract income collectors who are already optimistic about Magnificent Seven stocks.

How does the YieldMax Magnificent 7 Fund of Option Income ETFs generate income? The fund’s constituent holdings (NVDY, APLY, MSFO, etc.) use sophisticated options-trading strategies to indirectly derive income from their respective underlying stocks (NVDA, AAPL, MSFT, etc.).

These options-trading strategies tend to limit the upside potential of the YieldMax Magnificent 7 Fund of Option Income ETFs’ share price. In other words, the stocks of NVIDIA, Apple, Microsoft, and so on could rise sharply, but the YMAG ETF might only go up slightly or even decline.

Furthermore, the YieldMax Magnificent 7 Fund of Option Income ETFs’ share-price performance will get dragged down by 1.12% worth of annualized operating fees. The main risk, therefore, is that the YMAG ETF’s outsized cash distributions might be offset by the fund’s potential share-price drawdowns.

Stay Small and Stay Aware

Here’s what the impact of share-price erosion can look like. The NASDAQ 100 recently hit all-time highs and the Magnificent Seven stocks have generally performed well in 2025 so far.

However, as of August 8, 2025, the YieldMax Magnificent 7 Fund of Option Income ETFs is actually down 19% year-to-date. This is an example of how the YMAG’s sizable weekly cash distributions aren’t really “free money” for investors.

In the final analysis, it’s fine to buy a small number of shares of the YieldMax Magnificent 7 Fund of Option Income ETFs. Even if the investment goes awry, maintaining a tiny position size should prevent the YMAG ETF from blowing up your account.

Along with that guideline, be sure to monitor your position in the YieldMax Magnificent 7 Fund of Option Income ETFs. There’s no shame in selling your stake in the YMAG ETF if its share-price performance is not-so-magnificent.

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