NEOS MLP & Energy Infrastructure High Income ETF

MLPI

Market cap $166M

Volatility and dispersion are the likely key themes for 2026. The sky-high valuations and increasingly shaky economic/financial fundamentals support that view. At the same time, the market's "put mechanism," which has made the buy-the-dip strategy work since really the GFC, has not disappeared.

NEOS MLP High Income ETF (MLPI) offers double-digit income via covered calls and enhanced tax efficiency versus AMLP. MLPI's structure enables 100% return-of-capital distributions, deferring taxes and improving after-tax yields for investors. The fund's holdings mirror AMLP but add C-Corps and Canadian firms, creating slight tracking and risk differences.

Recent AI and mega-cap growth volatility has impacted income-focused asset classes, underscoring the need for high-quality value and reliable current income streams. I structure my portfolio for an 8–9% yield by combining core dividend aristocrats, strategic yield enhancers, and a minor allocation to tactical high-yield trades. In this article I elaborate on two tactical trade picks, where I see dislocated, abnormally high-yielding (20%+) opportunities.

The market seems to be increasingly punctuated by notable volatility spikes, while the broad indices (and AI names) struggle to justify their valuations. This is the necessary setup for covered call ETFs to come in and shine. However, there is a huge caveat (not that visible risk), which, if not properly considered, might lead covered call investors to be disappointed.

Neos MLP & Energy Infrastructure High Income ETF offers high-yield, tax-efficient MLP exposure without K-1 forms, targeting income-focused investors. MLPI deploys an out-of-the-money covered call strategy on MLP ETFs, capping upside but amplifying monthly distributions, currently yielding an estimated 15.4%. The fund is best suited for flat or modestly rising MLP markets, as its structure underperforms in strong rallies and does not protect against sector downturns.

Covered call ETFs play an increasingly more important role for income investors and their cash flows. These products come with several risks, but most of them should be acceptable for those who seek sustainable income. Yet, the key risk is an L-shaped sell-off, which might lead to a serious impairment of both NAV and current income.

The year is 2026, and the market (and macro) environment seem to be exactly the opposite of what is required for stress-free income. For prudent income investors, considering taking some risk off the table might be a good idea. But in most cases it comes at the cost of reduced income potential.

NEOS MLP & Energy Infrastructure High Income ETF (MLPI) offers direct exposure to high-quality midstream MLPs with an out-of-the-money covered call overlay. MLPI's physical structure enables investors to capture both underlying MLP income and option premiums, differentiating it from synthetic strategies. The fund's initial forward yield annualizes to a compelling 15.6%, among the highest in NEOS's covered call ETF suite.

Covered call ETFs promise high income and outperformance in sideways or declining markets, but face opportunity cost in bull markets. Despite strong AuM growth and new launches like NEOS MLP & Energy Infrastructure High Income ETF (MLPI), Covered Call ETFs are structurally suboptimal with inherent negative alpha. Covered call ETFs consistently underperform not only in rising markets due to capped upside, but also during market declines.

In an easing monetary policy environment, yields start to fall in line with rate cuts. Bond investors might be seeking to supplant the income they've grown accustomed to.