"Bond portfolios are complex to manage if you look for fixed-income assets for varying corporations and governments. It gets even more complicated if you want to allocate funds across bonds of different ranks. Luckily, there is an ETF you can use to replace your entire bond portfolio. It also has a much more attractive yield, giving you the opportunity to potentially 4x your passive income."
"The fund uses Section 1256 index options, which means 60% of the distributions are treated as long-term capital gains, and the remaining 40% is treated as short-term capital gains. While short-term capital gains are treated like ordinary income, long-term gains have more favorable tax rates. This fund is actively managed, and the professionals in charge will look at daily fluctuations in the Nasdaq 100 when deciding which options contracts to sell."
NEOS Nasdaq-100 High Income ETF (QQQI) generates a 13.85% trailing twelve-month yield by selling covered calls on the Nasdaq-100 while charging a 0.68% expense ratio. The fund uses Section 1256 index options so 60% of distributions are treated as long-term capital gains and 40% as short-term gains, affecting tax treatment. Portfolio managers actively select options contracts daily, weighing strike prices and expiration dates. Roughly half of holdings are in the technology sector, mostly large-cap names, with 12% mid-cap and no small-cap exposure. The ETF capped upside from covered calls but has delivered about 12% total return including distributions over the past year.
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