Garrett Paolella, Co-Founder, Managing Partner and Portfolio Manager at NEOS, joined Keith Black, Managing Director at RIA Channel, to discuss options-based ETF income strategies.
NEOS Investments is a global asset manager that focuses on yield-enhanced and risk-mitigated investment solutions using data-driven option strategies. The NEOS team is comprised of pioneers within the options-based ETF space, and their firm name is an acronym that stands for Next Evolution Options Strategies (NEOS).
The NEOS S&P 500 High Income ETF (SPYI) and the NEOS Nasdaq-100® High Income ETF (QQQI) own all of the underlying equities in each index and aim to offer tax-efficient monthly distributions to investors. Each month, a ladder of index call options is sold to generate income. Index options are taxed 60% at long-term capital gains rates and 40% at short-term capital gains rates, increasing the tax efficiency of the strategy. The annualized income target of SPYI is 10% to 12%, while the income target of QQQI is 12% to 15%.
The NEOS Enhanced Income 1-3 Month T-Bill ETF (CSHI) and the NEOS Enhanced Income Aggregate Bond ETF (BNDI) own portfolios of Treasury bills and aggregate bonds, respectively. Income from Treasury bills is tax-free at the state and local levels. To enhance income, put spreads on the S&P 500 index are sold. The annual income target from the put spread strategy is 1% to 1.5% for CSHI and 2% to 2.5% for BNDI.
WEBCAST – Pairing Monthly Income Generation with Tax Efficiency
Options-based ETFs have become a popular tool for investors looking to enhance their portfolio’s yield potential. However, it’s important to understand that the yield you see is not always the yield you get. Many times, chasing yields can come at the expense of principal erosion and higher taxes.
We invite you to join Garrett Paolella and Troy Cates from NEOS Investments, pioneers in the options-based ETF space, for a webcast that unpacks the current landscape of options-based ETFs.
Topics covered will include:
- What we’re watching in the markets from a macro lens
- Cutting through the noise in the growing options-based ETF segment
- An overview of the NEOS suite of ETFs that seek high monthly income and tax efficiency
- How to implement these strategies in client portfolios
Accepted for 1 CFP® / IWI / CFA CE Credit
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