NEOS S&P 500 High Income ETF
Best for taxable-account income investors who want a ~12% monthly yield from the S&P 500 but more upside and better tax treatment than a classic covered-call fund.
SPYI is an actively managed income ETF from NEOS that holds the stocks of the S&P 500 and sells S&P 500 index (SPX) call options against them. Unlike XYLD, it generally writes calls out of the money, and it sometimes buys further-out calls to form a spread. That leaves some room for the portfolio to rise before the upside is capped. Its main selling point is tax: SPX options receive 60/40 capital-gains treatment, and a large part of SPYI's distributions has historically been classified as return of capital.
Every month SPYI sells S&P 500 index call options and distributes the premium, together with the stocks' dividends, as a roughly 12% annualised distribution. Because the calls are usually written above the current index level, the fund keeps the first slice of any monthly gain, which a fully at-the-money fund like XYLD does not.
The tax angle: SPX index options are Section 1256 contracts, taxed 60% as long-term and 40% as short-term capital gains regardless of holding period. NEOS also harvests losses on the option positions. Together these have historically let SPYI label much of its payout as return of capital, deferring tax until you sell. That makes SPYI more attractive than JEPI or XYLD in a taxable account, though results vary by year.
The trade-off: upside is still limited in strong rallies, the 0.68% fee is higher than most peers, and the fund launched in 2022, so it has no record through a full bear market.
| Issuer | NEOS Investments |
| Strategy | Active: S&P 500 stocks plus mostly out-of-the-money SPX call options and call spreads |
| Expense ratio | 0.68% ($68 a year per $10,000) |
| Distribution yield | ~12% (paid monthly) |
| Upside | Partially capped: gains up to the call strike are kept |
| Tax treatment | Section 1256 options (60/40); a large share of distributions has been return of capital |
| Inception | August 2022 |
Yield and assets are approximate as of our last review (September 2026). Confirm current figures on the NEOS fund page before investing.
The equity side mirrors the S&P 500, so the largest positions are the index's mega-caps:
Yes. SPYI distributes every month, at an annualised rate of roughly 12% of its price.
JEPI (0.35%) holds a defensive, lower-volatility stock portfolio and gets its option income through equity-linked notes, which is taxed as ordinary income. It yields around 8%. SPYI (0.68%) holds the full S&P 500, yields around 12%, and uses index options with 60/40 tax treatment. For an IRA, JEPI's lower fee and lower volatility appeal. For a taxable account, SPYI's tax treatment often wins.
Both sell S&P 500 index calls monthly and yield around 12%. XYLD writes at-the-money calls on the whole portfolio, so it has almost no upside. SPYI mostly writes out-of-the-money calls and manages them actively, so it keeps some upside, and it adds tax-loss harvesting. SPYI costs 0.68% versus XYLD's 0.60%.
Historically a large portion has been classified as return of capital. Part of this is the result of tax management, not a sign that the fund is paying out more than it earns. Return of capital lowers your cost basis, so the tax is deferred, not eliminated. Check the year-end 1099 for the actual split.