The 1 ETF That Replaced My Entire Bond Portfolio and Pays 4x More

Core Insights - The NEOS Nasdaq-100 High Income ETF (QQQI) offers a 13.85% yield, significantly higher than traditional bond portfolios, making it an attractive alternative for income-seeking investors [1] - QQQI employs a strategy of selling covered calls on Nasdaq 100 holdings, which allows for high yields while maintaining exposure to a strong tech sector [1] - The fund has a 0.68% expense ratio, which, while higher than average, is justified by its substantial yield and favorable tax treatment of distributions [1] Group 1: Fund Performance and Strategy - QQQI's trailing twelve-month yield of 13.85% surpasses most fixed-income assets, providing an opportunity to potentially quadruple passive income compared to traditional bonds [1] - The fund's management actively monitors daily fluctuations in the Nasdaq 100 to optimize options trading, focusing on variables like strike prices and expiration dates [1] - Over the past year, QQQI has appreciated approximately 12% when including cash distributions, indicating strong performance despite the cap on potential returns from covered calls [1] Group 2: Sector Allocation and Tax Benefits - Approximately 50% of QQQI's holdings are in the tech sector, reflecting the composition of the Nasdaq 100, which is heavily weighted towards large-cap technology stocks [1] - The fund's use of Section 1256 index options means that 60% of its distributions are treated as long-term capital gains, which have more favorable tax rates compared to ordinary income [1] - Monthly cash distributions from QQQI provide a consistent income stream, contrasting with the less frequent payment schedules typical of bond investments [1]