iShares Russell 2000 ETF

IWM

Market cap $74.8B

NEOS Russell 2000 High Income ETF offers a tax-efficient, actively managed covered call spread strategy focused on stable, double-digit monthly income from small-cap volatility. IWMI delivers a 13.8% dividend yield and has outperformed the Russell 2000 since inception. Compared to IWM, IWMI provides superior tax treatment (Section 1256), higher yield, and resilience in sideways or bearish markets.

Small-cap stocks have outpaced large-caps in early 2026, and Vanguard S&P Small-Cap 600 Index Fund ETF Shares (NYSEARCA:VIOO) sits at the center of this rotation.

On this episode of the “ETF of the Week” podcast, VettaFi's Head of Research Todd Rosenbluth discussed the NEOS Russell 2000 High Income ETF (IWMI) with Chuck Jaffe of Money Life. The pair discussed several topics related to the fund to give investors a deeper understanding of the ETF.

Small-cap stocks are starting to outperform — and historically, that's been one of the clearest signals a new market cycle is underway. The small-cap stocks-tracking iShares Russell 2000 ETF (NYSE:IWM), which tracks U.S. small-cap stocks, has begun closing its performance gap with the S&P 500-tracking SPDR S&P 500 ETF (NYSE:SPY) after years of underperformance.

The S&P 500 stands as the ultimate benchmark for investors, a yardstick against which portfolios are measured.

IWM tracks nearly 2,000 small-cap U.S. stocks, while VOO focuses on the S&P 500's large-cap giants VOO is much cheaper to own, but both funds offer similar dividend yields IWM has slightly outperformed VOO over the past year, but with higher volatility and a deeper drawdown These 10 Stocks Could Mint the Next Wave of Millionaires ›

Small-cap stocks occupy a strange place in most portfolios. They deliver the highest long-term returns of any major asset class, yet vanish from investor attention for years at a time.

The surge of interest in covered call ETFs like those from YieldMax has reached the point where it is one of the more significant macro market risks for many investors. The recent bull market has masked the asymmetric risk profile of these ETFs; investors have not yet experienced a true market downturn with them.

The S&P 500 has produced phenomenal returns over the last three years, and that continued in January. But investors are starting to turn away from the megacap growth stocks that led the market higher.

XLP and other value-oriented funds have sharply outperformed growth sectors and broad indices over the past 3–9 months. Fund flow data reveals investors are reallocating capital from growth-oriented assets into value-oriented funds like XLP and SCHD.