NEOS Nasdaq 100 High Income ETF

QQQI

Market cap $11.2B

In times of uncertainty, investors will typically gravitate to simplicity, but lately, they've been running towards complexity. Options-based strategies, for example, have been seeing greater demand amid the market volatility.

Dividend investing sounds like a dream retirement strategy. However, there is a real dark side to it that many investors overlook and thereby suffer from long-term underperformance. This article details the dark side of dividend investing and how to avoid it.

Recent macro and fund-specific changes have led me to upgrade NEOS Nasdaq 100 High Income ETF to buy. Compared to the JPMorgan Nasdaq Equity Premium Income ETF, QQQI offers a higher yield (14%+) and a systematic option overlay. This provides superior downside protection vs. JEPQ's 10%+ yield.

Amplify CWP Growth & Income ETF is rated Buy, and NEOS NASDAQ-100 High Income ETF is rated Hold, reflecting a tactical shift for a range-bound market outlook. QDVO's broader, more diversified portfolio offers superior long-term positioning, especially if tech underperforms, despite its less aggressive covered call strategy. QQQI's higher option coverage (~50% vs. QDVO's ~21%) positions it for better income in flat markets, but neither ETF is optimized for aggressive income harvesting.

I advocate for value-oriented covered call ETFs with underlying holdings beyond AI-saturated large-cap growth indices like SPY and QQQ. The risks for NAV erosion and income declines are higher on this front. Despite these risks, including some QQQ/SPY-linked covered call ETFs could enhance diversification and capture higher yields from volatility and growth.

A 7% yield sounds compelling until you ask the question that separates income investing from return-of-capital illusion: where is the money actually coming from?

Cinthia Murphy, investment strategist at VettaFi, joined Nate Geraci on this week's ETF Prime to discuss record ETF flows in the first quarter despite challenging market conditions. The industry exceeded $460 billion in total flows, a 50% year-over-year increase from Q1 2025, according to Murphy.

Covered call ETFs have moved from a niche income strategy to one of the most discussed categories in retirement investing, and three names keep coming up in the same conversation, and all three pay monthly: JPMorgan Equity Premium Income ETF (NYSE:JEPI), JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ), and the NEOS Nasdaq-100 High Income ETF (NASDAQ:QQQI).

Covered call ETFs offer attractive monthly yields, often exceeding 10%, appealing to income-focused investors. Most top covered call ETFs are heavily concentrated in large-cap growth, specifically S&P 500 and Nasdaq-100 exposures. This concentration introduces significant risk, as these ETFs exhibit strong performance correlations and similar downside profiles.

It shouldn't come as much of a surprise to hear that high yield has a bad reputation, and in plenty of cases, it deserves it.