NEOS Investments debuted two new options income ETFs on the NYSE today.
The Westport, Connecticut-headquartered firm unveiled the NEOS Enhanced Income Aggregate Bond ETF (BNDI ) and the NEOS Enhanced Income Cash Alternative ETF (CSHI ), which are part of the firm’s initial suite of next evolution income ETFs.
The two funds 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, the firm said in a statement.
BNDI and CSHI both utilize a put spread approach which involves selling short puts and buying long puts, to generate option premium on an ongoing basis that can be distributed to shareholders as income without taking on outsized risk to do so, according to NEOS Investments.
BNDI is designed as an enhanced approach to the type of exposure offered by the U.S. Aggregate Bond Index and 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,” Garrett Paolella, co-founder and managing partner at NEOS, said in a statement. “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.”
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