The popularity and embrace of options-based income strategies by investors picked up in outsized ways in the last few years. NEOS Investments continues to shine in an increasingly competitive space, exemplified by its now award-winning NEOS Nasdaq 100 High Income ETF (QQQI ).
It might have been easy to get buried in a year heavy in active ETF strategy launches like 2024. However, QQQI held strong appeal with advisors and investors for its high, tax-efficient monthly income and upside capture potential within the Nasdaq-100.
QQQI recently won “Best New Active ETF” at the ETF.com awards. It’s not surprising, given the depth of experience NEOS brings to options-based ETF investing. After all, the firm is home to some of the pioneers of the space. Launched at the end of January 2024, the fund currently boasts nearly $1.37 billion in AUM, as of May 7, 2025.
“This award highlights the differentiated value QQQI brings to income-focused investors,” Garrett Paolella, co-founder and managing partner at NEOS, said in a press release. “In addition to seeking high monthly income and upside potential, QQQI stands out for its tax-efficiency — a critical yet often overlooked factor that can significantly enhance after-tax outcomes for investors looking to keep more of what they earn.”
The Key to QQQI's Success: Innovation and Experience
QQQI is actively managed and provides exposure to the Nasdaq-100 Index. It follows in the footsteps of the firm’s flagship fund, the NEOS S&P 500 High Income ETF (SPYI ), which boasts over $3.25 billion in AUM. Through the use of options writing, QQQI puts tech stock volatility to work for income. The fund uses a data-driven covered call options strategy designed to generate high income potential. It’s a strategy that the team at NEOS built from over 15 years of experience in options investing. The firm is home to the pioneers of options-based ETFs and the name itself showcases the culmination of that experience — Next Evolution Options Strategies.
Covered calls entail buying an asset while also writing a call on the underlying asset. This generates a premium, but also caps the upside potential should the underlying asset appreciate. QQQI also uses a call spread to achieve its income goals. This spread allows for more of the underlying to potentially participate in upside market movements when they occur, compared to indexed covered call option strategies.
Since inception, the fund outperforms the Invesco QQQ Trust, Series 1 (QQQ) as of May 7, 2025. Although past performance does not indicate future results, it underscores the strength of the strategy across rising and declining markets. QQQI also boasts a distribution rate of 13.92% as of April 30, 2025. Distribution rate annualizes the most recent distribution and divides by the fund’s NAV. It’s a forward-looking indicator of what an investor could earn should distributions remain the same.
QQQI Delivers Enhanced Tax-Efficiency to Income Portfolios
In addition to potential upside capture, the fund offers layers of tax efficiency for income-oriented investors. The options that QQQI uses are call options on the NDX and qualify as section 1256 contracts. These receive favorable tax treatment under IRS rules. The options held at year’s end are treated as if sold at fair market value on the last market day. Any capital gains or losses are taxed at 60% long-term and 40% short-term, no matter how long they were held.
Should equities rise or fall, NEOS can actively manage the call options to capture gains in the underlying assets or minimize losses. In addition, the fund’s managers also engage in tax-loss harvesting opportunities throughout the year on the call options, equity holdings, or both.
QQQI has an expense ratio of 0.68%.
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