Neos Russell 2000 High Income ETF (IWMI)
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Navigate Small-Cap Challenges With This ETF
Small-cap stocks are poised for a decent 2025. Helped by 3% over the past month, one aided by the Federal Reserve lowering interest rates in September, the Russell 2000 Index is higher by 12.67% YTD.
IWMI: Investing In Small-Cap Options
NEOS Russell 2000 High Income ETF offers a 14.4% yield by writing covered calls on small-cap equities, targeting monthly income. IWMI's actively managed options strategy distinguishes it from passive index funds, aiming to optimize income opportunities from the volatile Russell 2000. While IWMI's total returns lag the index and SPYI, it provides higher yield and defensive qualities during market downturns, suiting income-focused investors.
IWMI: Balanced Approach - Writing Options, Preserving Capital
IWMI offers small-cap exposure with high income via call writing, balancing yield and drawdown management, but expect long-term underperformance versus the index. IWMI's tax efficiency using Section 1256 contracts and ROC distributions makes it preferable for taxable accounts over RYLD, despite similar strategy outcomes. Yield management is key: IWMI targets stable payouts, but NAV erosion is a risk in adverse markets due to capped upside and maintained distributions.
IWMI: Could Be A Solid Option ETF Once The Dust Settles
Market declines offer opportunities to accumulate shares at discounted valuations, but IWMI should only supplement existing Russell 2000 positions due to its capped upside and downside risks. IWMI's call option strategy generates income, but has underperformed VTWO, with most distributions funded by return of capital, raising sustainability concerns. The current high-interest rate environment and tariff tensions make small-cap exposure less attractive, suggesting caution with IWMI investments.
IWMI: High Current Income And Some Downside Protection From Russell 2000 Options
The NEOS Russell 2000 High Income ETF was only launched in June 2024 with the goal of providing high current income through the sale of call options. A high current distribution rate has helped IWMI offset net asset value erosion and outperform the iShares Russell 2000 ETF over the past six months. The main appeal of selling call options is the high current income which cushions losses during market downturns and results in outperformance during sideways markets.
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IWMI: Short History, Strong Yield
IWMI enhances yield through an options strategy, offering a 14.8% distribution rate by leveraging Russell 2000 Index volatility. IWMI employs covered call writing, generating income from option premiums while capping upside potential, making it suitable for income-focused investors. Since its inception, IWMI delivered 11.4% ROI, underperforming the Russell 2000 Index tracker due to capped gains, but offers steady income in flat or moderately bullish markets.
This Small-Cap ETF Turns Volatility Into Income
Small-cap stocks appear favorably positioned in a declining rate and soft landing environment. For advisors and investors wanting to harness the potential in small-caps looking ahead, the NEOS Russell 2000 High Income ETF (IWMI) is worth consideration.
IWMI: Generating Income With Lower Volatility In A Shifting Small-Cap Market
IWMI ETF combines small-cap stock exposure with an active options strategy, offering tax-efficient monthly income yielding 14.82%. Small-cap stocks are poised for a comeback: IWMI positions itself to capitalize on potential shifts in market leadership as macroeconomic factors favor value-oriented, smaller companies. IWMI aims to enhance risk-adjusted returns, providing a strategic income option for investors seeking stability and upside potential with less volatility.
Video: ETF of the Week: IWMI
On this episode of the “ETF of the Week” podcast, VettaFi's Head of Research Todd Rosenbluth discussed the NEOS Russell 2000 High Income ETF (IWMI) with Chuck Jaffe of “Money Life.” The pair talked about several topics regarding the fund to give investors a deeper understanding of the ETF overall.
ETF of the Week: NEOS Russell 2000 High Income ETF (IWMI)
VettaFi's Head of Research Todd Rosenbluth discussed the NEOS Russell 2000 High Income ETF (IWMI) on this week's “ETF of the Week” podcast with Chuck Jaffe of “Money Life.” For more news, information, and analysis, visit the Tax Efficient Income Channel.
Don't Miss Income Oriented IWMI When Small-Cap Investing
The Fed's aggressive September rate cut could prove a boon to small-cap businesses in the months ahead. For those advisors and investors looking to expand their allocations, the NEOS Russell 2000 High Income ETF (IWMI) is worth consideration.
