October is half over. To this point, the 2025 edition of the tenth month of the year hasn’t produced catastrophic equity market crashes as past Octobers have. On the other hand, this month hasn’t exactly been smooth sailing. Again, the month is about half over, and markets have already been roiled by President Trump renewing harsh trade rhetoric against China and news that investment bank Jefferies and a pair of sizable regional banks are sitting on stacks of sour loans. That’s sparking concern that situation may extend throughout Wall Street and other money center banks. Experienced investors have been down these trying roads before. One lesson they’ve learn is it’s often worth having hedges at their disposal. Enter the NEOS Nasdaq-100 Hedged Equity Income ETF (QQQH).
As its name implies, QQQH generates income on the widely followed Nasdaq-100 Index (NDX). It also provides some downside protection.
QQQH Could Be Right for These Times
NDX doesn’t hold bank stocks. But the index has previously been punished when fears of banking sector health permeate the investment community. That indicates QQQH could be an ETF to consider over the near term.
“While we are questioning why all of these credit ‘one offs’ are seemingly occurring in a short period of time, the reality is that even though these exposures may be ‘well-contained’ and have a ‘limited financial impact,’ this is an industry where investors — especially those that are new to this sector — tend to ‘sell first and ask questions later,’ especially when it comes to elevated credit concerns,” said JPMorgan banking analyst Anthony Elian in a Thursday client report.
QQQH is relevant for other reasons. These include all the chatter about an AI bubble. That speculation could compel investors to potentially take profits in some bellwether NDX components. That’s a scenario that would shine a positive light on QQQH’s hedging properties.
However, there is some good news on the AI bubble front. First, short interest in marquee NDX AI names is broadly benign for the time being. That indicates bearish traders aren’t willing to risk capital on high-flying stocks. Second, many of NDX’s largest components are quality companies with massive cash stockpiles. That means they’re not comparable to the financially flimsy firms that dominated the index at the height of the internet bubble 25 years ago.
That is to say investors may not need QQQH’s downside protection, and that’s all right. That’s because the ETF has upside levers as highlighted by a 15.30% gain over the past six months. It yields a tidy 9.10%.
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