NEOS Investments debuted three options-based ETFs last week with the goal of providing income to investors while also increasing their market exposure. The funds include the NEOS Boosted S&P 500 High Income ETF (NASDAQ:XSPI), the NEOS Boosted Nasdaq-100 High Income ETF (NASDAQ:XQQI), and the NEOS Boosted Bitcoin High Income ETF (NASDAQ:XBCI).
All three of the ETFs bear annual expense ratios of 0.98%.
These “boosted” ETF offerings will incorporate a synthetic options overlay to increase exposure and income opportunities. Unlike conventional leveraged ETFs using swap-based or daily reset-based leverage, these funds use index options to maintain amplified exposure over longer outcome periods, a structure the firm says can lower financing costs compared with daily-reset leverage models.
For XSPI and XQQI, the funds hold stock portfolios aligned with their respective benchmarks while selling call options to generate premium income. Added exposure is achieved by buying call options and selling puts at similar strike levels to create a synthetic leverage to the underlying indexes.
The bitcoin-focused XBCI uses a different structure for tax reasons. It holds spot bitcoin exchange-traded products through a controlled foreign corporation subsidiary, while achieving both base and boosted exposures via options on bitcoin-linked instruments.
The funds will distribute their income in the first week of each month as part of NEOS’ broader move to more frequent ETF income payouts.
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