NEOS Long/Short Equity Income ETF (NLSI)

Overview

NLSI implements a long-short equity strategy by combining it with an options overlay to generate monthly income while maintaining exposure to US equities. The fund focuses on mid- and large-cap US exchange-traded equities, constructing its portfolio through a proprietary process that differentiates companies with strong expected fundamentals from those viewed less favorably. NLSI's approach involves building long positions through meticulous bottom-up security selection, while targeting short positions at equities with unfavorable balance sheets, cash flow concerns, or adverse sector conditions. Along with the equities portfolio, the fund employs a complementary options strategy that utilizes index-based put spreads, consisting of both written and purchased put options to generate option premium and enhance income generation. Additionally, the options positions may be actively adjusted prior to expiration to adapt to changing market conditions, thus supporting the overarching goal of income generation across the fund's portfolio. NLSI maintains a consistent long-short structure with defined gross exposure targets, and the fund may also hold cash and short-term instruments to bolster operations and address short positions effectively.

Products and Services

• Long-Short Equity Strategy:

  NLSI employs a long-short equity strategy that focuses on both long and short positions in mid- and large-cap US stocks. This strategy aims to capitalize on upward trends in stronger equities while simultaneously benefiting from downward movements in weaker stocks. By taking this dual position, the fund seeks to enhance overall returns while managing risk effectively.

• Proprietary Portfolio Construction:

  The fund utilizes a proprietary process for portfolio construction that enables it to distinguish between companies based on expected fundamentals. This process aids in identifying strong investment opportunities and avoids those with potential pitfalls, enhancing the overall effectiveness of the investment strategy.

• Bottom-Up Security Selection:

  NLSI's approach to security selection is grounded in thorough fundamental analysis, focusing on specific company metrics and performance indicators to build long positions. This bottom-up strategy ensures that each investment is carefully vetted before inclusion in the portfolio.

• Targeted Short Positions:

  The fund actively seeks short positions in equities exhibiting weak financial health or unfavorable market conditions. This targeted approach to shorting facilitates profit generation from stocks expected to underperform, effectively balancing the overall portfolio risk and return profile.

• Options Overlay Strategy:

  NLSI employs an innovative options overlay strategy that utilizes index-based put spreads to generate additional income. This strategy involves both written and purchased put options, which work together to produce option premiums and enhance the fund's income-generating capabilities.

• Active Position Management:

  Options positions within the fund are actively managed, allowing for adjustments prior to expiration to leverage market shifts or optimize overall performance. This dynamic handling of options positions is designed to complement the equity exposures without taking on direct hedging approaches.

• Cash and Short-Term Instruments:

  To support the ongoing operations of the portfolio and manage short positions, NLSI may hold cash and short-term instruments. This practice provides liquidity and flexibility necessary to navigate market fluctuations and maintain the fund's defined exposure targets.