SPYI offers a compelling balance of high income (12.5% yield) and price stability, making it an ideal anchor for income-focused portfolios. Unlike synthetic option ETFs, SPYI holds underlying S&P 500 equities, resulting in better NAV resilience and less capital erosion over time. The fund's capped upside means it will underperform traditional index ETFs in bull markets, but it excels in delivering consistent, tax-efficient monthly distributions.
SPYI offers high income yields with much of the S&P 500's upside, outperforming traditional covered call ETFs like XYLD. The fund's actively managed options strategy allows for greater flexibility and potential upside compared to passive buy-write approaches. SPYI has delivered consistent, growing monthly distributions, resulting in attractive double-digit yields on cost for investors.
The NEOS S&P 500 High Income ETF derives passive income opportunities from stock dividends and options.
I'm bullish on derivatives ETFs, especially as actively managed covered call strategies gain popularity. NEOS S&P 500 High Income ETF (SPYI) and Roundhill S&P 500 0DTE Covered Call Strategy ETF (XDTE) are two of my top picks. These ETFs offer unique approaches to generating income from the S&P 500, appealing to different investor preferences.
Options income strategies remain popular as market volatility persists heading into the summer months. The NEOS S&P 500 High Income ETF (SPYI) continues to prove popular with investors seeking to maximize tax-efficient S&P 500 income while also benefiting from volatility.
SPYI's dual-leg option strategy allows it to generate double-digit yields and some capital appreciation, making it attractive for income-focused investors. Despite market volatility, SPYI has maintained over 10% annualized yields, outperforming similar ETFs like XYLD in both income generation and recovery speed. SPYI's assets under management have surged, reflecting investor confidence in its ability to deliver high income and potential capital gains.
Attempting to obtain double digit yields from investments is not impossible, but very difficult, since the law of averages defaults to 6-8% for higher yielding securities.
The Neos S&P(R) 500 High Income ETF offers high monthly income via a call-writing strategy, mirroring the S&P 500 Index. SPYI's active management and data-driven call option strategy provide flexibility, potentially outperforming more mechanical strategies like Global X's ETFs. The fund's 12.48% distribution yield is attractive, primarily classified as return of capital, offering tax benefits and deferred taxation.
This week on NEOS Investments' Monthly Income Podcast, ETF industry veteran Tom Lydon was joined by NEOS' co-founders and managing partners Garrett Paolella and Troy Cates to discuss the 2024 Distribution Classifications for the NEOS S&P 500 High Income ETF (CBOE: SPYI) & the NEOS Nasdaq-100 High Income ETF (QQQI).
This article upgrades my rating for SPYI to BUY from my earlier hold rating due to the yield curve inversion that occurred recently. The inversion signals heightened the potential for a market downturn. If/when this happens, SPYI's low volatility and high income will be advantageous.
JEPI offers lower share price volatility but has highly variable and tax-inefficient distributions, making it less ideal for consistent income needs. SPYI provides more stable, higher monthly distributions with tax benefits, offering better long-term returns and downside protection for income investors. Lower share price volatility is only realized if you sell JEPI at the right time, and it does not guarantee protection from market crashes.
Good funds must withstand adversity, not just perform well in favorable conditions, to be considered solid long-term investments. Covered call funds have become popular for dividend investors seeking consistent income, especially with low rates over the past decade. SPYI ETF uses an aggressive options strategy, offering predictable monthly income with lower volatility compared to the S&P 500.