VIDEO: ETF of the Week: QQQI

Chuck Jaffe: One fund, on point for today. The expert to talk about it. Welcome to the ETF of the Week.

Yes, this is the ETF of the Week, where we get the latest take from Todd Rosenbluth, the head of research at VettaFi. And if you go to VettaFi.com, you’ll find all the tools you need to be a savvier, smarter ETF investor, and to get more details on the new newsworthy, trending and timely ETFs that we discuss here. 

Todd Rosenbluth, it’s great to chat with you again!

Todd Rosenbluth: It’s great to be back!

Chuck Jaffe: Your ETF of the Week is…

Todd Rosenbluth: The NEOS Nasdaq 100 High Income ETF. QQQI.

Chuck Jaffe: The QQQI, the NEOS Nasdaq 100 High Income ETF. Now, Todd, it wasn’t that long ago that we did the (SPYI A), which is the NEOS S&P 500 High Income ETF. So why this fund? Why the sister now?

Todd Rosenbluth: Well, for a couple of reasons. One, this ETF, QQQI, just passed its one year anniversary and it is approaching $1 billion in assets. That’s a milestone and a near milestone worthy of celebration. Despite the fact that many people are second guessing whether or not the Nasdaq 100 can continue to climb higher, it’s doing okay. It came out of the gate in 2025.

There was a little bit of volatility, but it’s bounced back. We think that getting growth stock exposure is still relevant for many people. But instead of the traditional index, you get a 14% yield using a covered call strategy from the experts in NEOS. So that’s why we’re excited to talk about QQQI today.

Chuck Jaffe: The other side of this is that a lot of people would think Nasdaq and high income — that doesn’t go together. Nasdaq is supposed to be my high fliers that are not necessarily paying me the big dividends, but that also means that they’d be surprised to know that this fund has a higher yield, or has had a higher yield than the S&P version!

Todd Rosenbluth: That’s right… You can get the benefits of the volatility within the underlying index to get the benefits for a higher income. So a 14% yield for this ETF, QQQI… You’re right. There are companies in the Nasdaq 100 that pay a dividend, but many of them do not pay a dividend. So this can be an income alternative to folks that want to have growth exposure.

Tesla, for example, is not a dividend paying stock. So what’s compelling to us about this ETF is it’s held up. It’s done relatively well, despite having the use of options from a covered call strategy to generate that income relative to the Nasdaq 100. And it’s done relatively well also compared to the JPMorgan product that was very popular in 2024, (JEPQ A+), that offers a covered call strategy. This ETF from NEOS is doing better as we kick off 2025. 

Why? This is all NEOS does. I mean, nothing wrong with a JP Morgan product. It’s a strong fund, but this is what the NEOS team does. They’re only options strategies. This is their commitment and focus. And they’re doing things in a tax-efficient manner.

Chuck Jaffe: At the same time… It is hard to talk about a yield that is not just double digits, because the S&P is like 11.5% —  the S&P NEOS version, the SPYI. But 14% feels like chasing yield. So how do you convince somebody that yes, this yield is real. It is likely to stay. And yet, you’re not being crazy in chasing yield.

Todd Rosenbluth: So, I’m a former stock analyst. When you would see a stock with a high dividend yield, that was a sign that that dividend was going to get cut. People sold off on the stock. The dividend was still there. It seemed unsustainable. And more often than not that dividend got cut. That’s not how this works in the options-based ETF world.

And there’s a suite of products NEOS has and others have that have double digit yields… Again, I’m not the expert on this fund. I’m an expert in the ETF industry. Go to NEOS’ website. Learn more about how they’re constructing the portfolio. Reach out and talk to them, if you have questions about the overall strategy.

You’ll walk away with confidence that these are experts that are running the strategy, and that that yield is not too good to be true. It is true. It is a 14% yield for investors.

Chuck Jaffe: Not just true, but sustainable, because that’s the other side. Investors don’t want to be jumping around. You know, this is not the alternative to the Q’s, where somebody is playing the (QQQ B+) and the Nasdaq index as much more of a market thing, where they might do the 200-day moving average, et cetera. 

Well, this is now a year old, so it does have a 200-day moving average. And it’s above it. It is there. You’re playing this for income. You want to make sure not only that that income’s not too good to be true, but that it’s sustainable.

Todd Rosenbluth: It appears to be sustainable to us. And now the fund’s track record can give you a sense of how the yield is moved month to month. Again, that yield is going to get updated. They’re using options. They’re using strategies that make it easier for folks who could do this on their own. But of course, you get the benefits of a professional active manager behind this.

And what we’re seeing is that many folks are using this as a complement to their existing Nasdaq 100 strategy. Invesco offers a couple of ETFs that are there. 

This can pair very well with those strategies. You get that extra income that you wouldn’t get through the triple Q’s or (QQQM B), and you get the benefits of a professional management team that is using things in it, using options in a tax efficient manner.

Chuck Jaffe: Well, that was going to be the next question. How is this appropriately used? How does it fit in a portfolio? And, the money that somebody is putting from this — is it coming from your stock portion or your junk bond high income bond portion? Like, where do you take money from to add this to your portfolio?

Todd Rosenbluth: So I think this is still equity exposure. You’re getting it using options and you’re generating income. But for many folks, they have exposure to growth stocks, either through the Nasdaq 100 or some other index based strategies. This is where QQQI fits into a portfolio to me. This is not bond exposure. Now you’re getting income and you’re getting above average income.

But, it’s not a bond that you’re investing in. And it will sell off. Not as much as the Nasdaq 100, but it will sell off when there is market volatility in the growth stocks tied to the Nasdaq 100. So you need to still think of this as a lower risk way of getting — higher income way of getting exposure to growth stocks.

This is not high yield bonds. It’s certainly not, Treasury bonds or anything like that. This is still getting equity exposure. But in a smarter, more income-oriented manner.

Chuck Jaffe: It also is adding to your holdings of the Magnificent Seven and the megacaps. And it even has Tesla, which, as you pointed out, has no dividend! You’re looking at a high income fund where the biggest holdings are Apple and Nvidia and Microsoft and Amazon, Broadcom, Tesla. 

Tesla has no dividend. So as much as you can say I want to add this for the income portion… It’s not like most investors don’t have all of this to one extent or another in their portfolio. So I want to make sure you’re factoring proper diversification into how you build this.

Todd Rosenbluth: Well, so that’s why I think this makes sense in the growth slice of the portfolio. If you already owned QQQ or other growth oriented strategies, and then you add this on top of it, not being cognizant of the underlying stock exposure. Again, you’re not owning stocks, but the underlying stock exposure that you have. Then yes, you would take on too much exposure towards some of those megacap growth stocks.

So it’s important to make sure you understand… what this is and what this isn’t. This is an above average income for exposure to the Nasdaq 100, with the benefits of a professional management team that does only this. And they do this in a tax-efficient manner. And while this ETF is only a year old, NEOS has a longer history.

You mentioned earlier SPYI. That’s another fund that they run, the NEOS team does, with a track record of delivering above average income.

Chuck Jaffe: One more thing, beyond all the things you said, it’s the ETF of the Week! It’s the NEOS Nasdaq 100 High Income ETF, QQQI, the ETF of the Week from Todd Rosenbluth at VettaFi. Todd, great stuff. We’ll talk to you again next week.

Todd Rosenbluth: It’s great to be with you.

Chuck Jaffe: The ETF of the Week is a joint production of VettaFi and Money Life with Chuck Jaffe. And I am Chuck Jaffe. And I’d love it if you check out my hourlong weekday podcast by going to MoneyLifeShow.com, or by searching for it wherever you find your favorite podcasts.

Now, if you’re searching for information on what could be your next favorite ETF, or maybe the favorites you’ve already got in your portfolio, go to VettaFi.com, where they have the full suite of tools that’s going to help you get more information and make yourself a better investor. 

They’re on X at @Vetta_Fi. Todd Rosenbluth, my guest, their head of research, he’s on X too, at @ToddRosenbluth

The ETF of the Week is here for you every Thursday. Make sure you don’t miss an episode by following along on your favorite podcast app. And we’ll be back with another great ETF for you to consider next week. Until then, happy investing everybody!

For more news, information, and analysis, visit the Tax-Efficient Income Channel.