NEOS Russell 2000 High Income ETF

IWMI

Valor de mercado US$ 1,26 bi

I compare RDTE (Roundhill Russell 2000 0DTE Covered Call Strategy ETF) and IWMI (NEOS Russell 2000 High Income ETF) for income-focused investors. I maintain a sell rating on RDTE due to ongoing capital erosion risk, despite its high yield, and downgrade IWMI to hold amid a clear downtrend. IWMI's structure and monthly distribution policy make it preferable in positive market momentum, while RDTE may only outperform in highly volatile, choppy markets.

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With the 10-year Treasury at 5.17%, I think an equity income portfolio only makes sense if it pays clearly more than bonds and still participates in the market. I would build a $1 million portfolio around IWMI (40%), SCHD (25%), VYMI (15%), JEPI (10%), and JEPQ (10%), for a blended trailing yield of ~8.7%, or ~$86,900 a year. IWMI is 40% of the capital and ~63% of the income. Over the past year it kept ~97% of the Russell 2000's total return while distributing ~13.7%.

Selling shares in retirement hands the market control over your income, but three ETFs built on options premiums and leveraged preferred stock flip that equation entirely, and not all of them work the same way in a taxable account.

NEOS ETFs offer high-yield, monthly income across diverse asset classes, avoiding large-cap tech exposure and enhancing portfolio diversification. Goldman Sachs' planned $2.25B acquisition of NEOS underscores the platform's rapid growth and innovation in options-based income ETFs. Five NEOS funds—NIHI, MLPI, IYRI, IWMI, and IAUI—provide yields from 9.7% to 14.5%, with strategies tailored to international, MLP, real estate, small cap, and gold assets.

Options-income ETFs now offer monthly payouts that dwarf what traditional dividend stocks provide, but before you move a dollar, there are tax mechanics and capital preservation risks that most income investors completely overlook.

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Three exchange-traded funds from NEOS have carved out a niche appealing to income seekers frustrated with how much of their yield ends up on a 1099-DIV as ordinary income.

I rate NEOS Russell 2000 High-Income ETF a BUY, targeting an 8%–12% total return over the next 6–12 months. IWMI's 13% trailing yield is compelling because it preserves meaningful Russell 2000 upside, with lower volatility than peers like ITWO and RDTE. The fund's flexible option strategy enables strong income generation without excessive sacrifice of total return, especially in more volatile or sideways small-cap markets.

Small caps have been having a year. The iShares Russell 2000 ETF (NYSEARCA:IWM) is up 18.3% year-to-date and 32.73% over one year, finally outperforming the S&P 500 after years of lagging.