Covered call ETFs from NEOS Investments generate high income by selling options on U.S. equity indexes, with distribution rates between 12% and 14%. These ETFs perform best in volatile, range-bound markets by harvesting option premiums driven by implied volatility. They offer tax advantages through favorable capital gains treatment and return of capital distributions, which can defer taxes. While they often underperform in strong bull markets due to capped upside, they provide steady cash flow that can help investors stay invested during market swings.
Covered-call ETFs offering 8%+ yields generate mostly non-qualified income taxed at ordinary rates in taxable accounts, reducing net returns. Holding four specific ETFs—SPYI, JEPI, JEPQ, and DIVO—in a Roth IRA shields investors from these taxes, pres...
Retirees relying on the JPMorgan Equity Premium Income ETF (JEPI) for monthly income may face tax challenges due to a $12,000 senior deduction phase-out starting at $150,000 modified adjusted gross income (MAGI). JEPI's distributions are mostly ordin...
The NEOS S&P 500 High Income ETF (SPYI) offers a headline yield near 12%, but about 95% of its payouts this year are return of capital, meaning investors are getting back their own principal rather than income. SPYI charges a high 0.68% fee compared ...
Money market funds currently offer yields around 3.5%, closely matching headline inflation, resulting in near-zero real returns for investors. Despite this, a record $8.44 trillion remains parked in these funds due to their safety and liquidity. To i...
