In a move that has shaken the high-yield community, Defiance ETFs, in partnership with Tidal Financial Group, officially announced on January 16, 2026, the liquidation of eight funds. This (almost) marks the effective end of their "Leveraged Long + Income" product line.

We are talking about a near-total wipeout. PLT, SMCC, HOOI, AMDU, HIMY, ETHI, TRIL, and LLYZ are all facing the firing squad. The last day to trade is January 26, and full liquidation follows on January 30. There is one survivor-for now. I will get to that shortly.

I started this site with a specific goal in mind—you can see it in my "About" section: I wanted to be the "first to find out who crumbles." It brings me no joy to report that in early 2026, it's an old favorite like Defiance that's forced to adapt its strategies amid tough market realities.

Defiance launched this lineup in 2025 with an original vision: marry the growth potential of a leveraged ETF (think 2x plays like TSLL) with weekly income from options overlays. It was positioned as an evolution of their broad-market yield funds, offering retail investors amplified upside plus cash flow. On paper, it sounded innovative. But it set up a perfect storm of risks.

All the risks(and goals) were clearly defined in the prospectus: long-term capital appreciation via leverage (using swaps and derivatives) and current income, often distributed as return of capital (ROC) to maintain high yields. Fees ranged from 0.99% to 1.15%, plus trading costs. Risks were explicit—leverage could double losses, volatility might undermine options, and ROC erodes net asset value (NAV) over time, potentially leading to total depletion without growth or inflows

Or in other words….. 

What happens when an underlying stock drops by 10% - its 2x counterpart drops by 20%. Now add an options strategy (credit call spreads) that generates income but caps potential upside. Factor in bad launch timing this was in-fact the perfect storm.  

High yields of 70-100% sound appealing, but they're frequently just ROC—returning your principal. Without strong underlying performance to outpace these payouts, the fund effectively cannibalizes its own AUM(Assets Under Management):

Defiance's dynamic leverage plus options was ambitious, but they launched into a choppy market. The erosion killed the NAV, and poor underlying performance likely led to retail fatigue which killed the inflows.

Why delist now, when other high-yield funds have limped along worse? I was shocked too, assuming hype around underlyings like Palantir, AMD, and Ethereum would sustain them. But numbers don't lie—it's all about AUM.

If customers aren't buying the ETF, the fund has no assets. The expense ratio (the fee you pay to hold the fund) is what pays the bills—legal, administrative, trading costs. If the AUM is too low, the fees generated can't cover the electric bill, and management has to pull the plug.

As discussed on a recent episode of one of my favorite podcasts; The Compound and Friends, ETFs often need ~$24 million to hit profitability; If a fund can't break that ceiling, it is effectively a "Zombie ETF."

I want to specifically highlight AMDU. In my opinion, this is the most heartbreaking loss of the bunch.

Unlike its siblings, AMDU actually worked. Since its inception just five months ago, (and thanks to its underlying’s performance) AMDU provided a massive 82% annualized yield while its Net Asset Value (NAV) actually appreciated by roughly 15% (without DRIP). It was the "Unicorn"—a high-yield fund that went up.

But the market didn't care. With only ~$5 million in assets, the economics didn't work. It is getting delisted despite being the best performer. It proves a harsh rule of the ETF jungle: Without demand, there is simply no ETF.

Then there is the sole survivor of the firing squad: MST (tracking MicroStrategy).

Why did MST survive when better funds died? Bitcoin hype. Despite the fund being an absolute disaster on paper—eroding over 90% since inception and down 40% in total value even after payouts—it managed to hold onto roughly $21 million in AUM.

It is hovering right at that "zombie" line we talked about ($21M vs the $24M safe zone), but the cult following of MSTR and Bitcoin kept enough retail money in the pot to save it from the executioner... for now. Management likely believes a Bitcoin rally could save the fund's mechanics. MST is alive….for now.

For fund managers, it's all about timing and underlying performance. There's not much you can do if you launch a leveraged ETF at the start of a downcycle—though perhaps rethinking the options strategy could help. It's the same for us retail investors: How we use these income vehicles and when we buy them is key to our success.

If you are holding PLT, AMDU, or the others, you likely have until January 26th to sell before the funds liquidate and return cash at NAV.

Stay smart out there folks. Until next div date, see ya later.

Disclaimer: This newsletter is for informational and entertainment purposes only and does not constitute financial advice; please consult a qualified professional before making investment decisions.