Asset manager NEOS Investments, led by a highly experienced team that previously built and grew numerous options-based ETFs currently in the market, is today launching its initial suite of next evolution income ETFs.
The new products are the NEOS S&P 500 High Income ETF (SPYI); NEOS Enhanced Income Aggregate Bond ETF (BNDI); and NEOS Enhanced Income Cash Alternative ETF (CSHI).
The firm writes that all three ETFs are actively managed and designed to help investors and advisors navigate the challenges of the current market environment while also aiming to deliver opportunities for monthly income generation and tax efficiency.
NEOS Investments’ first equity solution, SPYI, aims to deliver an attractive monthly distribution. The Fund’s management team uses a strategy intended to replicate the S&P 500 Index then implements a data-driven option overlay strategy that utilises a call spread approach as opposed to the more common covered call strategy that many passive funds utilise to generate high monthly income, tax efficiency, and the potential for upside equity participation in rising markets.
BNDI and CSHI both utilise a put spread approach which involves selling short puts and buying long puts, with the goal of generating option premium on an ongoing basis that can be distributed to shareholders as income without taking on outsized risk to do so.
BNDI is designed as an enhanced approach to the type of exposure offered by the U.S. Aggregate Bond Index, seeks to have less sensitivity to credit and duration risk via its integrated options strategy which aims to provide tax-efficient monthly income greater than what an investor would receive in bond interest alone.
CSHI is an innovative alternative to ultra short-term fixed income and cash positions in a portfolio. The Fund combines exposure to short-term (one to three month) Treasury Bills with the actively managed put spread approach described above. CSHI seeks to provide an enhanced monthly income stream above what investors would receive from investing in T-Bills alone.
“Investors need and deserve an enhanced suite of options-based ETFs to help them build more resilient core equity and income portfolios,” says Garrett Paolella, Co-Founder and Managing Partner at NEOS. “Aiming to solve today’s increasingly complex portfolio construction challenges is something my colleagues and I are very excited to be doing with the rollout of these ETFs and we are thrilled to be able to start talking with investors, advisors and institutions about the role our solutions can play in all types of portfolios.”
