The NEOS S&P 500 High Income ETF (SPYI) has become one of the top “boomer candy” funds in the past few years. It has attracted over $3.8 billion in assets under management and has beaten other similar funds. This article explores whether the SPYI ETF is a good fund to buy.
What is the NEOS S&P 500 High Income ETF?
The NEOS S&P 500 High Income ETF is a covered call ETF that aims to achieve two goals: provide regular income to investors and an exposure to the S&P 500 Index. The S&P 500 index is one of the most popular assets, tracking the top 500 companies in the country.
The SPYI has a stake in all companies in the index, including popular names like NVIDIA, Microsoft, Apple, Amazon, and Meta Platforms. By doing this, the fund benefits as the S&P 500 Index rises, but to some extent.
The other part of the fund is known where it uses the options market, which lets one place call and put trades. A call option gives users the right but not the obligation to buy an asset, while a put does the opposite.
The SPYI’s options strategy has two components: writing call options on the S&P 500 Index and using the premium received to buy out-of-the-money call options on the index.
By using this strategy, the fund is able to generate returns in three ways: the performance of the S&P 500 Index, dividend paid by companies in the fund, and the options premium.
The only limitation for the fund is the options strike price. If the S&P 500 Index surges and hits the strike price, the fund misses out on the rally. This explains why the price return of many covered call ETFs is usually lower than the benchmark.
Read more: JEPQ vs JEPI: Are these boomer candy ETFs good buys in 2025?
Is SPYI ETF a good fund to buy?
The SPYI ETF has an expense ratio of 0.68%, higher than most passive ETFs. funds like the Vanguard S&P 500 (VOO) and iShares S&P 500 (IVV). This ratio is understandable since it has more expenses because it is an actively managed fund.
The benefit of investing in the SPYI ETF is its high dividend yield of 12.3%. This means that a $10,000 investment will generate about $1,200 in dividends annually. It will also have more gains if the S&P 500 Index rises.
The other benefit, which explains why the SPYI ETF beats the JPMorgan Premium Equity ETF (JEPI) is that the manager uses tax loss harvesting to reduce taxes. It also beats JEPI because it invests in all companies in the S&P 500, while the former buys about 135 of them.
The SPYI ETF has had a total return of 2.35% this year, higher than JEPI’s 0.55%. Its performance in the last three years was 40% compared to JEPI’s 26%. Similarly, as shown below, its 12-month returns were 12.5%, higher than JEPI’s 7.3%.
SPYI ETF technical analysis
The daily chart shows that the SPYI stock price has been in a strong uptrend in the past few months. It moved from a low of $40.75 on April 7 to a high of $50, its highest point since February 24.
The stock has moved above the 50-day and 100-day moving averages. Also, the Relative Strength Index (RSI) and the MACD have all pointed upwards. Therefore, the stock will likely keep rising, with the next point to watch being at $50.4. A move above that level will point to more gains.
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