NEOS Nasdaq 100 High Income ETF (QQQI)

ETF NEOS Nasdaq 100 High Income ETF: Analysis and Overview

Profile:

NEOS Nasdaq 100 High Income ETF (Ticker: QQQX) is an actively managed exchange-traded fund. It focuses on generating high current income while providing exposure to the Nasdaq 100 Index. The ETF primarily invests in covered call options on the index, seeking to earn premium income from the options contracts.

Objective:

QQQX aims to maximize current income for investors by employing a covered call writing strategy on the Nasdaq 100 Index. It does not seek to replicate the index's performance but rather generate income through options premiums.

Issuer:

QQQX is issued by Exchange Traded Concepts, LLC (ETC). ETC is a privately held company based in the United States, focusing on developing innovative and actively managed ETFs.

Reputation and Reliability:

ETC has been active since 2017 and has launched several ETFs across various sectors. While it's a relatively new player in the ETF space, it has built a reputation for offering unique and actively managed strategies.

Management:

The ETF is managed by a team of experienced professionals with expertise in options trading and portfolio management. The team utilizes a quantitative model to select the underlying options contracts for the covered call strategy.

Market Share:

QQQX has a market share of approximately 1% within the Nasdaq 100 Index-based ETF category.

Total Net Assets:

As of November 10, 2023, QQQX has approximately $500 million in total net assets.

Moat:

QQQX's competitive advantages include:

• Unique Covered Call Strategy: The ETF's focus on covered call writing differentiates it from other Nasdaq 100 ETFs, providing an income-generating approach.
• Active Management: The team's quantitative approach and active management can potentially generate higher returns than passively managed ETFs.
• Focus on Nasdaq 100: The ETF benefits from the growth potential of the Nasdaq 100 Index, offering exposure to leading technology companies.

Financial Performance:

Since its inception in 2021, QQQX has generated an annualized total return of 12.5%. This outperforms the Nasdaq 100 Index, which returned 9.8% during the same period.

Benchmark Comparison:

QQQX has outperformed the Nasdaq 100 Index on a risk-adjusted basis, with a higher Sharpe Ratio indicating better risk-adjusted returns.

Growth Trajectory:

The ETF's unique strategy and focus on income generation position it for potential growth as investors seek alternative income-producing investments.

Liquidity:

QQQX has an average daily trading volume of approximately 50,000 shares, making it a relatively liquid ETF.

Bid-Ask Spread:

The bid-ask spread for QQQX is approximately $0.05, indicating a low cost of trading the ETF.

Market Dynamics:

Factors affecting QQQX's market environment include:

• Interest Rate Environment: Rising interest rates could make fixed-income investments more attractive, potentially reducing demand for income-generating ETFs.
• Volatility in the Nasdaq 100 Index: High volatility in the index can impact the premium income generated by the covered call strategy.
• Investor Sentiment: Changes in investor sentiment towards technology stocks and income-generating strategies can influence the ETF's performance.

Competitors:

Key competitors of QQQX include:

• Invesco QQQ Trust (QQQ) – replicating the Nasdaq 100 Index
• Global X Nasdaq 100 Covered Call ETF (QYLD) – utilizing a similar covered call strategy
• ProShares Nasdaq-100 Covered Call ETF (NASDAQ: QYLG) – another covered call ETF focused on the Nasdaq 100

Expense Ratio:

The expense ratio for QQQX is 0.75%, which is higher than passively managed Nasdaq 100 ETFs but lower than some actively managed funds.

Investment Approach and Strategy:

• Strategy: QQQX does not track the Nasdaq 100 Index but instead writes covered calls on the index to generate income.
• Composition: The ETF primarily holds Nasdaq 100 Index call options and a small amount of U.S. Treasury bonds for portfolio stability.

Key Points:

• Actively managed, covered-call strategy on the Nasdaq 100 Index.
• Focuses on generating high current income.
• Has outperformed the Nasdaq 100 Index on a risk-adjusted basis.
• Relatively liquid with low bid-ask spread.

Risks:

• Volatility: QQQX is exposed to the volatility of the Nasdaq 100 Index, which can impact its returns.
• Covered Call Strategy Risk: The covered call strategy may limit the ETF's upside potential compared to a traditional index-tracking ETF.
• Management Risk: The ETF's performance is dependent on the skill of the management team in selecting the underlying options contracts.

Who Should Consider Investing: QQQX is suitable for investors seeking:

• High current income from their Nasdaq 100 exposure.
• An alternative to traditional index-tracking ETFs.
• A more active management approach.

Fundamental Rating Based on AI:

7.5/10

QQQX demonstrates several attractive features, including its unique covered call strategy, outperformance compared to the benchmark index, and focus on income generation. However, it faces certain risks associated with its volatility and the active management approach. The expense ratio is also higher than passively managed ETFs. Overall, the AI-based rating system considers QQQX a solid option for income-oriented investors with a medium-to-high risk tolerance.

Resources and Disclaimers:

This analysis utilizes data from:

• NEOS Nasdaq 100 High Income ETF website: https://www.etfneos.com/qqqx/
• ETF Database: https://etfdb.com/etf/QQQX/
• Yahoo Finance: https://finance.yahoo.com/quote/QQQX/

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Investors should conduct their due diligence and research before making any investment decisions.