MRP SynthEquity ETF (SNTH)

The MRP SynthEquity ETF (SNTH) is a fund that owns US stocks but wraps them in options strategies to squeeze more income out of the portfolio and reduce the sting of sharp down moves. Instead of just holding shares and waiting for dividends, SNTH uses call options to generate yield, and uses put options to soften losses. The trade-off is blunt: you get higher current income, but you also give up some of the upside if stocks soar.

What SNTH actually does

Most ETFs buy stocks and hold them. SNTH buys stocks, then sells call options on them. When you sell a call option, you are giving someone the right to buy your stock at a fixed price in the future, and in return you collect cash upfront. That cash is your extra income on top of the dividend the stocks pay.

The catch: if the stock rises above the call’s strike price, your shares get called away. You miss the gain above that level. For example, if you own a stock trading at $100, you might sell a call with a $110 strike. If the stock jumps to $150, you still only get $110 per share — you miss the last $40. You have given up that upside in exchange for the premium you collected when you sold the call.

SNTH also uses put options on the downside. It buys put options, which give it the right to sell shares at a guaranteed price if stocks crash. This is insurance — you pay for it upfront (it reduces your returns in calm markets), but it protects you if things fall apart. In severe downturns, the put options kick in and limit losses.

Who this strategy serves

SNTH is for people who want steady income from equities but are less interested in chasing big gains. A retiree living off investments might prefer the higher, predictable income and the downside cushion. An investor who thinks stocks will be flat or up modestly over the next few years might be happy capping upside at a known level. Someone who gets nervous in crashes and likes the idea of insurance might pay for that peace of mind.

The fund is also useful for sophisticated investors who understand options mechanics and want to shape their portfolio’s return profile. Instead of simply holding stocks and hoping they rise, they can accept a defined, lower ceiling on gains in exchange for higher current cash and protection against steep losses.

The real costs

Nothing about SNTH is free. Selling call options and buying put options both cost money in the form of lower long-term returns. The strategy works well when volatility is high (options are expensive, so you collect fat premiums when you sell calls) and when stocks are indeed flat or down. It works poorly when stocks climb steadily — you miss that upside. Over full market cycles, the fees of running the options overlay and the forgone gains from capped upside usually mean SNTH trails a simple stock fund in total return, even with its higher dividend yield.

The expense ratio is also meaningful — option strategies require constant management and trading, so costs are higher than a passive index fund. That fee comes straight out of performance.

When the trade works and when it doesn’t

In 2022, when stocks fell sharply, SNTH’s put options likely cushioned losses while a plain stock fund suffered. That was the insurance paying off. In a year like 2023 or 2024, when stocks soared, SNTH was capped by its sold calls, so it lagged badly. Income was steady, but total return suffered because upside was missing.

Over a full decade, SNTH’s returns depend heavily on the path of stock prices and the level of volatility. High volatility and flat-to-down markets favour the strategy. Strong steady gains hurt it. Investors should look at SNTH’s track record not just in the most recent year or two, but over full market cycles, to understand whether the income and downside protection are worth the upside they are giving away.

How to research SNTH

Read the fund’s prospectus to understand the specific call and put strikes it uses, how often it rebalances, and what the expense ratio actually is. The prospectus will explain the options strategy in detail.

Compare SNTH’s total return — not just its yield — against a plain US stock fund over the past five and ten years. Watch for years when SNTH underperformed significantly (likely when stocks rose sharply) and when it outperformed (likely when stocks fell or were flat). Ask yourself: Is that trade-off worth it for your goals? If you would be happier with higher current income and lower volatility, accept the lower long-term returns, SNTH might fit. If you want to maximise wealth over time and can tolerate down years, a regular stock fund will likely serve you better.