Add Some Income to a Hot Trade

Core Insights - The resurgence of international equities is a significant theme for advisors and investors in 2025, with the MSCI EAFE Index up 24.1% year-to-date compared to the S&P 500's 12.4% return [1] - The NEOS MSCI EAFE High Income ETF (NIHI) offers a higher income proposition for investors in ex-U.S. developed market equities, yielding 2.75%, which is more than double the yield of competing S&P 500 ETFs [1] Group 1 - NIHI debuted last month and follows a simple strategy of selling calls on the iShares Core MSCI EAFE ETF (IEFA), avoiding complex options strategies that can lead to net asset value erosion [2] - The popularity of covered call ETFs has surged, particularly after the 2022 bond bear market, but they come with risks that investors should be aware of [3] - Covered call ETFs provide income through options contract premiums and dividends, but they may limit upside potential if call options are exercised [4] Group 2 - NEOS has demonstrated the ability to manage risks associated with call-writing while allowing for some upside participation for investors [4] - NIHI aims to balance income generation with potential upside, appealing to income-focused investors who also seek some growth [5] - Covered call ETFs may be particularly attractive when underlying securities are expected to trade sideways or decline slightly, allowing investors to trade off potential gains for near-term income [6]