For years, cryptocurrency was an asset class centering around capital appreciation, but thanks to some inventive ETF issuers, it’s now possible to source high levels of income in this space. Count NEOS Funds as among the leaders at the intersection of digital currencies and income. Building on the success of the $880.2 million the NEOS Bitcoin High Income ETF (BTCI ), NEOS recently rolled out the NEOS Ethereum High Income ETF (NEHI) – an options income spin on the second-largest cryptocurrency.
NEHI is an efficient, easy-to-understand income-generating complement (or alternative) to traditional Ethereum investing. In simple terms, the new NEOS ETF holds a stake in standard Ethereum ETF and sells call options against that position.
“The Fund seeks to distribute monthly income generated from writing call options on Ethereum Futures ETFs,” according to the issuer. “The Fund implements a data-driven call option strategy, saving investors the time and potential expenses of trading options themselves.”
NEHI Already Relevant
One of the biggest hurdles any new ETF needs to clear is relevance when it comes to market. That may not be an issue for NEHI. In fact, it’s clear the rookie NEOS ETF is pertinent right out of the gate. As stablemate BTCI confirms, investors are more than willing to embrace the union of digital currencies and income.
Adding to the relevance and perhaps the allure of NEHI are expectations the Federal Reserve will lower interest rates again this month. The most recent inflation report supports that notion and that could boost the appeal of options income ETFs like NEHI because the income served up by those products is largely independent of Fed moves. Plus if rates further decline, the appeal of bonds and cash could be diminished, potentially compelling income investors to consider ETFs like NEHI.
Another perk offered by NEHI is its pedigree. While many options-based income ETFs, including some popular products, sacrifice upside potential in the name of out-sized yields, NEOS’s active management has a documented track record of being able to check the boxes of both income and some upside capture. As it relates to NEHI, that’s pertinent today because some market observers believe Ethereum is poised to rebound and surge over the course of next year.
For example, noted Ethereum bull Tom Lee’s BitMine Immersion Technologies (BMNR) recently added nearly $131 million to its already substantial holdings of ether and he’s betting the digital currency can ascend to $62,000 from around $3,100-$3,200. Even if his prediction is half right, NEHI could benefit.
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