NEOS Investments Adds Tax-Efficient Income ETF NIHI

The ETF industry continues to see significant growth and product proliferation. Few segments within the ETF landscape have seen as much interest in the last few years as income ETF strategies. With uncertainty rising, shops have continued to expand their options for investors to add current income. NEOS Investments is the latest to contribute to the pile with the NEOS MSCI EAFE High Income ETF (NIHI), a brand-new addition.

“NEOS has established a strong following with advisors for their options based ETFs,” noted Todd Rosenbluth, head of research for TMX VettaFi. “It is great to see them continue to expand their lineup and provide international equity exposure.”

NIHI arrives just as many investors may be turning towards tax considerations. The year is in its final few months, and market watchers may be wanting ways to both add ballast and reduce tax exposure — income ETF NIHI may offer both.

NIHI’s Approach

The fund charges a 68 basis point fee for its approach. It actively invests with a goal of providing high monthly income. The income ETF invests in underlying ETFs that track the MSCI EAFE Investable Market Index. From there, it adds a call options strategy to get that high income, primarily by writing call options on that index, per its prospectus. It looks to get dividend exposure therein, as well.

The underlying index is market cap-weighted and includes large-, mid, and small-cap representation. It includes companies with market caps ranging from about $50 million to $325 billion, with segments including industrials and financials as standouts.

What role, then, might an income ETF like NIHI play moving forward? Those investors near retirement may want some current income in their portfolios should market volatility rise. By getting call option exposure abroad, NIHI can offer some helpful diversification, too. Younger investors, too, may want that steady income and tax efficiency, as well, that the income ETF can offer. 

At the same time, its active approach can help get the most out of its call option strategy. Looking ahead to the end of the year, NIHI arrives as a contender in the category that may intrigue.

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