Founded by Options-based ETF pioneers, NEOS ETFs are designed to offer tax-efficient monthly income while providing exposure to core portfolio building blocks
Westport, CT., (August 30, 2022) – NEOS Investments (“NEOS”), a global asset manager 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:
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 utilizes a call spread approach as opposed to the more common covered call strategy that many passive funds utilize to generate high monthly income, tax efficiency, and the potential for upside equity participation in rising markets.
BNDI and CSHI both utilize 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 (1-3 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,” said Paolella. “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.”
NEOS ETFs aim to deliver the next evolution of investments strategies, where seeking income is the outcome. Built on decades of research and experience, NEOS ETFs aim to empower the investor with portfolio building blocks to provide high income, tax efficiency, and diversification through data-driven options-based ETFs.
Julia Stoll / Patrick Phalon
MacMillan Sullivan Communications
S&P 500 Index: The Standard and Poor’s 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 large companies listed on exchanges in the United States.
Bloomberg Barclays U.S. Aggregate Bond Index: The Bloomberg U.S. Aggregate Bond Index (the “Index”) is designed to measure the performance of the U.S. dollar denominated investment grade bond market, which includes investment grade (must be Baa3/BBB- or higher using the middle rating of Moody’s Investors Service, Inc., Standard & Poor’s Financial Services, LLC, and Fitch Inc.) government bonds, investment grade corporate bonds, mortgage pass through securities, commercial mortgage backed securities and other asset backed securities that are publicly for sale in the United States. The securities in the Index must have at least 1 year remaining to maturity and must have $300 million or more of outstanding face value. Asset backed securities must have a minimum deal size of $500 million and a minimum tranche size of $25 million. For commercial mortgage backed securities, the original aggregate transaction must have a minimum deal size of $500 million, and a minimum tranche size of $25 million; the aggregate outstanding transaction sizes must be at least $300 million to remain in the Index. In addition, the securities must be U.S. dollar denominated, fixed rate, non-convertible, and taxable. The Index is market capitalization weighted.
Covered Call: Call options are financial contracts that give the option buyer the right but not the obligation to buy a stock, bond, commodity, or other asset or instrument at a specified price within a specific time period. The term covered call refers to a financial transaction in which the investor selling call options owns an equivalent amount of the underlying security. To execute this, an investor who holds a long position in an asset then writes (sells) call options on that same asset to generate an income stream. The investor’s long position in the asset is the cover because it means the seller can deliver the shares if the buyer of the call option chooses to exercise.
Call Spread: A call spread is an option spread strategy that is created when equal number of call options are bought and sold simultaneously.
Put Spread: A put option (or “put”) is a contract giving the option buyer the right, but not the obligation, to sell—or sell short—a specified amount of an underlying security at a predetermined price within a specified time frame. A put spread is an option spread strategy that is created when equal number of put options are bought and sold simultaneously.
Co-Founder, Managing Partner
NEOS aims to maximize your income while minimizing tax consequences through the core exposure most investors have come to know and trust.
So, what does the next evolutions in ETFs look like? It approaches fund construction with the idea that seeking income is the outcome, and it looks a lot like the NEOS family of ETFs.