Goldman Sachs Acquires NEOS ETFs; High Yield Comes With Trade-offs
Goldman Sachs has acquired NEOS Asset Management and added its Nasdaq-100 covered-call fund, QQQI (NASDAQ:QQQI), to its lineup. The product offers a headline yield of over 14%, but investors give up potential upside compared to the Invesco QQQ Trust (NASDAQ:QQQ). Since January 2024, QQQ has outperformed QQQI by about 10 percentage points in total return. The performance gap is due to QQQI's covered-call strategy, which generates income but limits gains when markets rise. The fund’s returns are also sensitive to changes in Nasdaq-100 volatility (VXN). If VXN drops below 15, call premiums shrink and distributions may decline, reducing the high yield. Goldman Sachs' acquisition of NEOS reflects a broader trend: derivative income strategies have grown at an annual rate of 80% over five years. QQQI holds $13.1 billion in assets and is marketed as suitable for retirees seeking monthly income.
Topics: covered-call strategy ETFs Goldman Sachs acquisition income investing Nasdaq-100