The high volatility of the large-cap growth and tech-heavy Nasdaq-100 index translates into substantial options premiums, and several covered-call exchange-traded funds (ETFs), including the NEOS Nasdaq-100 High Income ETF (QQQI 0.21%), have emerged to take advantage.
But this ETF isn’t like the rest. It includes structural enhancements designed to offer better upside capture and improved tax efficiency. It even won ETF.com’s Best New Active ETF award in 2025.
Here’s what makes it stand out, how it works, and what to know before investing.
What is it?
What is NEOS Nasdaq-100 High Income ETF?
The NEOS Nasdaq 100 High Income ETF blends passive exposure to the Nasdaq-100 index with an actively managed covered-call strategy.
For stock selection, it holds the same 100 non-financial Nasdaq-listed companies as the Nasdaq-100, weighted by market capitalization.
To generate income, it sells NDX index options, which are classified as Section 1256 contracts and benefit from favorable 60/40 tax treatment.
Unlike rules-based covered-call ETFs, it has the flexibility to sell options dynamically and can also buy calls to improve upside capture in rising markets.
Exchange-Traded Fund (ETF)
How to invest
How to buy NEOS Nasdaq-100 High Income ETF
- Open your brokerage app: Log into your brokerage account where you handle your investments.
- Search for the ETF: Enter the ticker or ETF name into the search bar to bring up the ETF's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this ETF.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Holdings
Holdings of NEOS Nasdaq-100 High Income ETF
Although the options overlay in the NEOS Nasdaq 100 High Income ETF is dynamic and can shift over time, its core equity holdings mirror the Nasdaq-100 index.
That means it has a strong tilt toward large-cap technology sector stocks, a growth stock bias, and includes all members of the so-called “Magnificent Seven” in its top positions.
In mid-2025, the top 10 holdings in the ETF were:
Should I invest?
Should I invest in NEOS Nasdaq-100 High Income ETF?
This ETF may be a good fit if you're bullish on the Nasdaq-100 and its concentration in mega-cap tech and growth stocks but prefer to realize returns through monthly income rather than capital appreciation.
You’ll need to be comfortable with capped total returns during strong bull markets, some tax drag on income distributions, and paying a higher expense ratio for active options management.
However, its use of Section 1256 contracts and tax loss harvesting strategies helps improve after-tax efficiency compared to other income-generating ETFs.
Dividends
Does NEOS Nasdaq-100 High Income ETF pay a dividend?
The NEOS Nasdaq 100 High Income ETF pays a monthly distribution, but it's not a traditional dividend. While a small portion may come from dividends paid by Nasdaq-100 companies, the bulk is derived from options premiums.
The June distribution of $0.6282 per share translates to a 14.65% yield and was classified as 98% return of capital.
Return of capital isn't taxed immediately but it reduces your adjusted cost basis, effectively deferring capital gains tax until you sell.
Expense ratio
What is NEOS Nasdaq-100 High Income ETF (QQQI) expense ratio?
The NEOS Nasdaq 100 High Income ETF charges a 0.68% expense ratio, which is high compared to regular index ETFs but typical for covered-call ETFs. For a $10,000 investment, this works out to an annual $68 in fee drag. You don't pay this fee out of pocket. It accrues on the back end and reduces net performance.
Expense Ratio
Historical performance
Historical performance of NEOS Nasdaq-100 High Income ETF
| 1-Month | 3-Month | 6-Month | 1-Year | |
| QQQI NAV | 4.58% | 13.72% | 6.74% | 16.43% |
| QQQI Market Price | 4.53% | 13.67% | 6.70% | 16.35% |
| Cboe Nasdaq-100 BuyWrite Monthly Index | 2.63% | 2.57% | -3.75% | 9.71% |
Related investing topics
The bottom line
This ETF is a differentiated covered-call ETF built on the Nasdaq-100 index. It’s designed for investors who want regular income while staying exposed to mega-cap tech growth stocks.
With its flexible options overlay, tax-smart design, and strong yield, it offers a more refined approach to income generation than some of its index-based competitors, so long as you’re comfortable trading off some long-term upside.
FAQ
NEOS Nasdaq-100 High Income ETF FAQ
What is the difference between QQQ and QQQI?
The Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) is a long-only Nasdaq 100 index ETF that does not use options.The NEOS Nasdaq 100 High Income ETF is a Nasdaq-100-based ETF that actively sells options to generate high monthly income.
Does QQQI pay a dividend?
The NEOS Nasdaq 100 High Income ETF pays a distribution, not a dividend. Currently, the ETF yields 14.65% on a forward basis.
Is QQQI a good investment?
The NEOS Nasdaq 100 High Income ETF could be a good investment for a risk-tolerant income investor looking to maximize yield from mega-cap U.S. tech growth stocks in a tax-efficient manner.
Who owns QQQI?
The NEOS Nasdaq 100 High Income ETF is owned by its shareholders and offered by NEOS Investments.
