NEOS Investments Launches Next Evolution Option Income ETF Suite

WESTPORT, Connecticut–(BUSINESS WIRE)–NEOS Investments (“NEOS”), a global asset manager led by a highly experienced team that has previously built and developed numerous option-based ETFs currently on the market, today launches its initial suite of follow-on ETFs with evolutionary income:

  • NEOS S&P 500 High Income ETF (SPYI);

  • NEOS Enhanced Income Aggregate Bond ETF (BNDI); and

  • NEOS Enhanced Income Cash Alternative ETF (CSHI).

All three ETFs are actively managed and designed to help investors and advisors meet the challenges of the current market environment while also aiming to provide monthly income generating and tax efficiency opportunities.

NEOS Investments’ first capital solution, SPYI, aims to provide an attractive monthly distribution. The fund’s management team uses a strategy designed to track the S&P 500 index, then implements a data-driven option overlay strategy that uses a call allocation approach, as opposed to the more common covered call strategy that very passive funds use to generate high monthly income, tax efficiency and the potential for upward equity participation in growing markets.

Both BNDI and CSHI use a put spread approach, which involves selling short puts and buying long puts, in order to generate an option premium on an ongoing basis that can be distributed to shareholders as income without incurring huge risk for this.

BNDI is designed as an advanced approach to the type of exposure offered by the US Aggregate Bond Index, seeking to have less sensitivity to credit and duration risk through its integrated options strategy, which aims to provide a tax-efficient monthly income, on -larger than that which an investor would receive only interest on bonds.

CSHI is an innovative alternative to ultra-short-term fixed income and cash portfolio positions. The fund combines exposure to short-term (1-3 month) Treasury bills with the actively managed put spread approach described above. CSHI seeks to provide an enhanced monthly income stream over what investors would receive from investing in Treasury bills alone.

“Investors need and deserve an improved array of option-based ETFs to help them build more sustainable fixed equity and income portfolios,” said Garrett Paolella, co-founder and managing partner at NEOS. “The drive to solve today’s increasingly complex portfolio construction challenges is something my colleagues and I are very excited to do with the rollout of these ETFs, and we’re excited to start talking to investors, advisors and institutions about the role , which our solutions can play in all types of wallets.”

NEOS was founded by a team of options industry pioneers who collectively bring decades of experience, both individually and as colleagues, working together at a number of previous firms on some of the most successful options ETF implementations of the past decade+.

To learn more about NEOS Investments and its other product and service offerings, please visit: https://neosfunds.com/

About NEOS

NEOS ETFs aim to provide the next evolution of investment strategies where the pursuit of income is the outcome. Built on decades of research and experience, NEOS ETFs aim to empower the investor with portfolio building blocks to deliver high income, tax efficiency and diversification through data-driven options-based ETFs. For more information, visit https://neosfunds.com/.

Important revelations

Investors should carefully consider the investment objectives, risks, fees and expenses of exchange-traded funds (ETFs) before investing. To obtain an ETF prospectus containing this and other important information, please call (866) 498-5677 or view/download a prospectus at https://neosfunds.com. Please read the prospectus carefully before investing.

An investment in the NEOS ETF involves risk, including possible loss of principal. Equity securities purchased by the Funds may involve large price fluctuations and the potential for loss.

The use of derivative instruments involves risks different from, or possibly greater than, the risks associated with direct investment in securities and other traditional investments. These risks include (i) the risk that the counterparty to a derivative transaction will not fulfill its contractual obligations; (ii) risk of mispricing or misvaluation; and (iii) the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. Derivatives prices are highly volatile and can fluctuate significantly over a short period of time. The Fund’s use of leverage, such as borrowing money to purchase securities or the exercise of options, will cause the Fund to incur additional expenses and increase the Fund’s gains or losses. The earnings and prospects of small and medium-sized companies are more volatile than larger companies and may experience a higher failure rate than larger companies. Small and medium-sized companies generally have lower trading volume than larger companies, which may cause their market price to decline more disproportionately than larger companies in response to selling pressure, and may have limited markets, product lines or financial resources and lack of management experience. The funds are new with limited operating history.

Additional risks specific to BNDI CSHI

Debt issuers and other counterparties may be unable or unwilling to make timely payments of interest and/or principal when due or otherwise meet their obligations. Changes in an issuer’s credit rating or the market’s perception of an issuer’s creditworthiness may also adversely affect the value of a Fund’s investment in that issuer. Fund income may decrease when yields fall. This decline may occur because the Fund may subsequently invest in lower-yielding bonds as the bonds in its portfolio mature, approach maturity or are repaid, otherwise the bonds in the Fund must purchase additional bonds. Interest rate risk. The risk that fixed income securities will decline in value due to rising interest rates; a fund with a longer average portfolio duration will be more sensitive to changes than a fund with a shorter average portfolio duration.

Additional risks specific to BNDI

Securities rated below investment grade (commonly referred to as “junk bonds,” which may include those bonds rated below “BBB-” by S&P Global Ratings and Fitch Ratings, Inc. (“Fitch”) or below “Baa3” by Moody’s Investors Service, Inc. (“Moody’s”)), or are unrated, may be considered speculative, may involve higher levels of risk than higher-rated securities of similar maturity, and may be more likely to default.

Definitions:

S&P 500 Index: The Standard and Poor’s 500, or simply the S&P 500, is a stock market index tracking the performance of the stocks of 500 large companies listed on stock exchanges in the United States.

Bloomberg Barclays US Aggregate Bond Index: The Bloomberg US Aggregate Bond Index (the “Index”) is designed to measure the performance of the U.S. dollar investment grade bond market, which includes investment grade (must be Baa3/BBB- or higher using Moody’s average rating Investors Service, Inc., Standard & Poor’s Financial Services, LLC and Fitch Inc.) government bonds, investment grade corporate bonds, mortgage-backed securities, commercial mortgage-backed securities and other asset-backed securities that are publicly traded in United States. Securities in the index must have at least 1 year remaining to maturity and must have $300 million or more in par value outstanding. Asset-backed securities must have a minimum deal size of $500 million and a minimum tranche size of $25 million. For commercial mortgage-backed securities, the initial aggregate transaction must have a minimum transaction size of $500 million and a minimum tranche size of $25 million; total outstanding transactions must be at least $300 million to remain in the Index. In addition, the securities must be denominated in US dollars, with a fixed interest rate, non-convertible and taxable. The index is market capitalization weighted.

Covered call: Call options are financial contracts that give the option buyer the right, but not the obligation, to buy a stock, bond, commodity, or other asset or instrument at a specified price within a specified period of time. The term covered call refers to a financial transaction in which the investor selling call options owns an equivalent amount of the underlying security. To accomplish this, an investor who holds a long position in an asset then writes (sells) call options on that same asset to generate an income stream. An investor’s long position in the asset is the cover because it means the seller can deliver the stock if the buyer of the call option chooses to exercise.

Call distribution: A call spread is an option spread strategy that is created when an equal number of call options are bought and sold at the same time.

Place the distribution: A put option (or “put”) is a contract giving the option buyer the right, but not the obligation, to sell – or sell short – a specified amount of an underlying security at a predetermined price within a specified time period. A put spread is an option spread strategy that is created when an equal number of put options are bought and sold at the same time.

NEOS ETFs are distributed by Foreside Financial Services, LLC.

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