The monthly distribution schedules for each ETF are on their corresponding fund pages in the “Distributions” section. We aim to update this section within 2 business days after the ex-dividend date of our ETFs each month.
The record date, or day of record, and the ex-dividend date of an ETF are both important dates relating to the distribution or dividend payout process. These dates determine which investors will receive distributions. The other two dates in the process are the declaration date (the day the distribution or dividend payment is announced) and the payable date (the date distributions are paid to shareholders).
Yes, all performance and distribution rate information on the website is shown net of fees and expenses.
Understanding the differences between types of yields and distribution rates can be vital for investors seeking steady income streams. For more information about each, please click here.
Options-based ETFs focused on generating reliable income for investors may also provide the added benefit of return of capital distributions. While some investors may view return of capital as a negative, it may be beneficial, especially from a tax perspective.
Return of capital is a distribution made by an ETF to its investors that is classified as a return of the investor's original investment. Unlike dividends or interest income, return of capital is not considered income, and is not immediately taxable, which can be particularly useful for ETFs that use option writing strategies to generate income.
For more information about Return of Capital, we encourage you to learn more here: https://neosfunds.com/return-of-capital-distributions-in-option-writing-etfs/
Historically, “return of capital” may have been thought of as a negative aspect of investment funds, especially in funds that offered regularly scheduled distribution payments to their investors, but didn’t generate enough returns to fund those payments. The result… an erosion of an investors original principal and a “destructive” return of capital.
The experienced portfolio management team behind the NEOS ETF suite manages both the underlying exposures and options strategies seeking to enhance after-tax outcomes. By strategically realizing gains from the equity or options components and pairing them with historical losses, the team can potentially classify a portion of monthly distributions as “return of capital” for tax efficiency.
A unique benefit of the ETF structure is that realized losses can be carried forward indefinitely and used to offset future gains at opportune times, potentially supporting more consistent and tax-efficient income generation over time.
Across the NEOS lineup, each strategy seeks to offer distributable income consistent with total return potential, allowing investors to pursue monthly income in a tax-efficient manner without eroding investor principal.
It’s important to note that while a return of capital distribution will generally not be taxable in the year it’s received, it will reduce each shareholder’s cost basis in the ETF and may result in a higher capital gain or lower capital loss when the shares on which the distribution was received are sold.
Once an investors cost basis is exhausted (goes to zero), distributions classified as a return of capital will be taxed at a long-term capital gain if fund shares have been held for a period longer than 1 year.
The yearly distribution tax classifications for NEOS ETFs are reported via a 1099 form, making it a convenient and consolidated way to view the distribution classifications. It’s always important to consult your tax expert because every individual’s situation is unique.
NEOS stands for Next Evolution Options Strategies. To this point, though there has been a proliferation of options-based ETF strategies brought to market, the vast majority provide only a one-dimensional solution such as income generation or downside protection, and we believe investors want and deserve more.
That’s why we’ve brought together a global team of experts who collectively bring decades of experience, both individually and as colleagues working together at several previous firms to offer our Next Evolution Options Strategies.
NEOS ETFs aim to empower investors with portfolio building blocks to provide high income, tax efficiency, and diversification through data-driven options-based ETFs. Our ETFs can be purchased at most online brokerages with access to U.S. stock exchanges. We always recommend speaking with a trusted financial professional to discuss how our ETFs may fit within your investment goals and overall objectives.
