JEPI - SPYI: Fund Your Retirement With This Diverse Covered Call ETF

2024-03-20 12:25:17 ET

Summary

• Neos S&P500 High Income ETF (SPYI) offers exposure to the S&P500 with a double-digit dividend yield of 11.6% and monthly distributions.
• The fund aims to generate consistent high income and can be a valuable addition to income-focused portfolios.
• SPYI's covered call strategy may limit upside potential but provides a tax-efficient approach to generating income.

Overview

I've come to the realization that this is probably the best time in history to be an income investor. There are so many new funds at your disposal that you can tweak your portfolio in a plethora of ways to match your needs. The Neos S&P500 High Income ETF ( SPYI ) provides a way to gain the exposure and diversity of the S&P500 while providing a double digit dividend yield. The current dividend yield sits at 11.6% and distributions are paid out on a monthly basis.

We can see that SPYI has traced the total return of the S&P 500 ( SPY ) pretty closely until the recently movement upward over the last two quarters. The fund's stated objective is to generate a high level of monthly income in a tax efficient manner. Equity appreciation comes secondary. The gap in total return isn't surprising however because of the structure of a covered call ETF. They are essentially selling some of their upside in exchange for income generation. SPYI has a similar issue as JPMorgan's Equity Premium Income ETF ( JEPI ) in nature but we will compare the performance of the two later on....

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