In the enhanced volatility of 2025 markets, the NEOS S&P 500 High Income ETF (SPYI) maintains notable outperformance within its covered call ETF peer group. The strategy’s high distribution rates and enhanced tax-efficiency continues to draw advisor and investor attention and flows.
SPYI combines S&P 500 exposure with a covered call strategy to generate high, tax-efficient, monthly income for investors. The fund invests in the S&P 500 while using money earned from written calls to buy long, out-of-the-money call options on the S&P 500 Index. An out-of-the-money call option has no intrinsic value as the current price of the underlying asset falls below the strike price.
See also: SPYI Nets Over $1 Billion in AUM in 2025
The fund currently boasts a distribution rate of 12.15% as of June 30, 2025. Distribution rate offers a forward-looking estimate of what investors would earn should distributions remain the same over the next 12 months. It annualizes the most recent distribution and divides by the fund’s NAV at time of distribution.
SPYI Outperforms Amongst Covered Call ETF Peers
NEOS can actively manage the call options to capture gains in the underlying assets or minimize losses when equity markets rise or fall. Heightened volatility often benefits call-writing strategies, as they earn higher premiums in volatile environments.
Advisors and investors continue to take note of SPYI’s general performance and high distribution rates. The fund netted $1.77 billion in flows year-to-date as of July 21, 2025 according to FactSet data.
SPYI combines high income with layers of tax efficiency. The fund uses index options, which are taxed favorably as Section 1256 Contracts under IRS rules. Options held at year’s end are treated as if sold at fair market value on the last market day. Any capital gains or losses are taxed as 60% long-term and 40% short-term, no matter how long investors hold them. This can offer noteworthy tax advantages.
SPYI’s managers also engage in tax-loss harvesting opportunities throughout the year on the call options, equity holdings, or both.
SPYI has an expense ratio of 0.68%.
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