NEOs ETFs: The new Income machine

Introduction: The Rise of Earnings-Centered Possibility ETFs

In a yield-starved market, income-seeking buyers have gravitated towards option-based ETFs—funds that mix underlying exposures (equities, crypto, and many others.) with by-product overlays (usually writing or promoting coated name choices) to ship month-to-month or common distributions. NEOs ETF (NEOS Investments’ suite) , YieldMax ETFs are two competing excessive yield etfs on this evolving nook of the revenue ETF panorama.

Whereas the revenue potential is alluring, the mechanics, threat tradeoffs, and tax penalties differ considerably. On this article, we:

• Evaluate NEOs ETF methods with YieldMax ETFs,

• Break down three flagship NEOs ETFs (SPYI, QQQI, BTCI),

• Look at their efficiency, yield, threat, and superb use instances

NEOs ETF vs YieldMax ETFs: Strategic Variations

What Are YieldMax ETFs?

YieldMax ETFs are constructed round artificial or derivative-based exposures to high-volatility belongings (e.g., Tesla, MicroStrategy, Coinbase) and generate revenue by systematically writing name choices. As InvestmentU notes, “YieldMax ETFs don’t personal the underlying shares instantly. As a substitute, they use derivatives to simulate lengthy publicity … then generate revenue by systematically promoting name choices.” Funding U

These funds usually tout extraordinarily excessive yields—however these include elevated threat of NAV erosion, particularly when the underlying asset value shifts adversely. *InvestmentU’s “YieldMax ETFs and Options” article illustrates how spectacular returns come at the price of focus and volatility. Funding U

What Are NEOs ETFs?

In distinction, the NEOs ETF household from NEOS Investments tends to pair broader benchmarks or crypto exposures (like S&P 500, Nasdaq-100, Bitcoin) with possibility methods to reap premium and supply month-to-month revenue. Due to the broader base, the volatility and idiosyncratic focus threat could be decrease (relative to single-stock exposures) — although the by-product overlay nonetheless provides complexity.

Head-to-Head: YieldMax vs NEOs ETF

One warning usually flagged by business voices (and echoed in ETF commentary) is that yields vastly exceeding what the underlying markets can sometimes assist could also be unsustainable — in impact, the fund may very well be returning capital simply to fulfill distribution guarantees.

Though each methods supply revenue, yield-chasing with out consideration to threat and sustainability can backfire.

SPYI: NEOs S&P 500 Excessive Earnings ETF

What Is SPYI?

SPYI is NEOS’s flagship “excessive revenue” ETF constructed on the S&P 500 index + an possibility overlay (principally coated calls) to generate month-to-month revenue.

Efficiency & Yield

• Since its launch (August 2022), SPYI’s NAV-based annualized return has hovered round ~14.08% (as of August 2025).

• Market value returns are comparable, indicating modest premium/low cost inversion results.

• Its distribution yield is engaging in comparison with conventional fairness revenue funds, although a big share of distributions could also be categorised as Return of Capital (ROC), which erodes price foundation.

Strengths & Dangers

• Strengths: Broad U.S. fairness publicity with revenue overlay; much less focus threat than area of interest or single-stock revenue methods; established sufficient to indicate some observe file.

• Dangers:
   1. Capped upside in sturdy bull markets (possibility writing sacrifices some positive aspects).
   2. ROC-heavy distributions complicate tax planning and scale back price foundation over time.
   3. In extreme drawdowns, possibility premiums might not supply full safety.
   4. Liquidity and bid-ask spreads might add execution threat.

Learn Subsequent: 5 Month-to-month Dividend ETFs for Earnings Portfolios

QQQI: NEOs Nasdaq-100 Excessive Earnings ETF

What Is QQQI?

QQQI gives publicity to the Nasdaq-100 index plus possibility overlays, focusing on greater yield and revenue by leveraging the tech/progress tilt of Nasdaq.

Efficiency & Yield

• Launched extra not too long ago (January 2024), its shorter observe file reveals stronger nominal returns versus SPYI in lots of comparability durations.

• As an illustration, in mid-2025, QQQI’s YTD efficiency outpaced SPYI in lots of metrics, although at the price of greater volatility and drawdowns.

• Volatility metrics present QQQI sometimes has greater customary deviation and deeper most drawdowns than SPYI (e.g. ~−20% vs ~−16%) in noticed durations.

Strengths & Dangers

• Strengths: Larger revenue potential (because of volatility of underlying); extra upside seize in sure tech rallies (regardless of possibility drag).

• Dangers: Extra concentrated sector threat (tech-heavy publicity); possibility overlay might clip aggressive upside positive aspects; newer historical past means much less stress-tested; identical ROC / tax points as SPYI.

BTCI: NEOs Bitcoin Excessive Earnings ETF

What Is BTCI?

BTCI is NEOS’s enterprise into crypto: it gives publicity to Bitcoin (by way of ETPs / crypto proxies) and overlays possibility methods on that publicity to generate month-to-month revenue.

Efficiency & Yield

• Launched in October 2024.

• As of August 2025:
   - Its distribution charge (based mostly on the latest payout) has approached ~28%.
   - Cumulative returns since inception have been sturdy (≈ +49.5% in NAV phrases in that span).
   - Its market value has usually traded close to NAV, with small premiums/reductions (~0.10%).

• Nonetheless, a big portion of distributions are estimated to be Return of Capital (ROC ~ 95%), considerably affecting tax foundation.

Strengths & Dangers

• Strengths: Publicity to crypto upside mixed with revenue overlay, which few different merchandise instantly supply.

• Dangers:
   1. Bitcoin’s inherent volatility is dramatic—possibility overlay might buffer however received’t get rid of giant swings.
   2. Possibility overlay on crypto is extra advanced (much less mature derivatives markets, liquidity, correlation mismatches).
   3. ROC heavy distributions erode foundation, complicating tax and long-term return.
   4. Restricted historic observe file, particularly by means of crypto downturns.

Find out how to Suppose About Match: Use Instances & Allocation Technique

Diversification & Correlation

• SPYI and QQQI have a tendency to maneuver collectively (excessive correlation), so utilizing each provides restricted hedging profit.

• BTCI can supply diversification from equities, however at the price of considerably greater volatility.

Yield vs Development Tradeoff

• For income-focused buyers, all three are interesting revenue autos—however the revenue comes with trade-offs: capped upside, ROC erosion, and better threat.

• In sturdy bull markets, conventional fairness ETFs might outperform because of much less drag from possibility overlays.

Tactical Use Instances

• Earnings sleeve: In a total-return core portfolio, NEOs ETFs might fill the “revenue producing” slot quite than the core fairness slot.

• Vary-bound / sideways markets: Possibility-laden methods are likely to shine when underlying belongings are neither raging upwards nor crashing.

• Tax-efficient allocations: Given heavy ROC distributions, NEOs ETFs could also be higher held in tax-deferred accounts (e.g. IRAs) quite than taxable accounts.

YieldMax vs NEOs: When One Might Edge Out the Different

• In case you’re snug taking concentrated bets and need most yield, YieldMax is perhaps alluring—however the threat of capital erosion is actual 

• For buyers preferring considerably broader publicity with much less single-stock threat, NEOs ETFs supply a extra balanced publicity to option-based revenue.

Conclusion

NEOs ETF and YieldMax ETFs signify two taste variants of the rising choices revenue ETF house. The NEOs suite (SPYI, QQQI, BTCI, and many others) tends to favor broader benchmarks over single-stock focus, which can supply a extra tempered threat profile whereas nonetheless delivering excessive distribution yields. YieldMax ETFs, against this, aggressively lean into yield by way of concentrated exposures and possibility overlays—however in addition they carry a higher hazard of capital erosion and volatility threat.

If I had been advising you, I’d deal with SPYI, QQQI, and BTCI as instruments inside the “revenue / different” sleeve of a diversified portfolio, not as replacements for core fairness or fixed-income holdings. And I’d lean towards holding them in tax-advantaged accounts to attenuate the drag from ROC distributions.