NEOS MLP & Energy Infrastructure High Income ETF

MLPI

Valor de mercado US$ 850 mi

Long-duration Treasuries finally offer an enticing yield, but several less obvious risks could undermine both the income and the hedge. Covered call ETFs share more with fixed income than most investors realize, and today's environment is paying them more for that role. The biggest, most popular covered call funds may fail exactly when defense is needed most.

NEOS MLP & Energy Infrastructure High Income ETF (MLPI) offers high income via a 14% nominal dividend, primarily funded by option premiums and realized gains. MLPI's concentrated midstream portfolio is attractive, but the covered call strategy sacrifices capital appreciation for current income, leading to underperformance versus peers in bull markets. I rate MLPI a Hold, favoring it for income-focused investors expecting sideways to moderately bullish markets, but not for those seeking maximum total return.

Investor sentiment and credit markets suggest defensive positioning is at levels not seen in years. Popular safe-haven assets come with a hidden cost that could hurt investors if the bearish signals prove wrong. 2 covered call ETFs that I discuss in this article offer a compelling middle ground between high income and downside resilience.

Pension funds and billion-dollar asset managers have long used energy infrastructure for predictable income, but the same exposure for ordinary investors comes with a tax headache that most people never see coming.

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.

A proposed $5,000 government check for every adult could significantly impact markets if enacted. Such helicopter money would likely drive inflation higher and steepen the yield curve, with most effects expected to be transitory. Extreme policy measures risk opening a Pandora's box of unintended consequences, especially if they become permanent.

The Undercovered Dozen series spotlights 12 lesser-covered stocks featured on Seeking Alpha. This curated selection aims to provide fresh investment ideas and foster community discussion around under-the-radar equities. Readers are encouraged to engage, share perspectives, and highlight additional overlooked investment opportunities.

NEOS MLP & Energy Infrastructure High Income ETF offers a compelling blend of robust midstream energy assets and systematic covered call strategies. MLPI is producing an annualized yield near 14%, leveraging high-quality pipeline holdings and index-based option selling for efficient, tax-friendly income generation. The fund's holdings exhibit positive momentum amid geopolitical tailwinds, supporting a 'Buy' rating for income-focused investors seeking stable, double-digit yields.

Covered call ETFs present an opportunity cost, justified mainly for investors prioritizing income or lacking access to alternatives. I have not identified a covered call instrument that serves as an effective buy-and-hold hedge offering meaningful premium benefits. The sweet spot deal is based on a combination of; a) OTM covered call regime and b) underlying assets that are unlikely to surge or plunge.

NEOS MLP & Energy Infrastructure High Income ETF offers a 14.75% distribution, but I rate it Hold at $54.89 due to opportunity cost from its call-writing strategy. Recent LNG export data and strong earnings from top holdings suggest midstream equities retain significant upside, making MLPI's income-for-upside tradeoff less attractive. MLPI's call strategy has capped upside, leading to underperformance versus uncapped peers like MLPX, especially as midstream fundamentals strengthen.