The technology sector continues to garner investor attention and flows in the first quarter. For advisors and investors looking to blend Nasdaq exposure with tax-efficient, high monthly income, the NEOS Nasdaq 100 High Income ETF (QQQI) is worth consideration.
Tech stocks rose in Monday trading after two weeks of underperformance. News of Apple’s potential iPhone license agreement for Google’s Gemini AI boosted Alphabet’s stock by 5%, reported CNBC. Also today, Nvidia (NVDA) kicked off its GTC Conference focused on AI, prompting further gains for the company’s stock.
According to Jay Hatfield, founder and CEO of Infracap, markets should rally once more beginning next month as earnings season kicks off.
“We’re in this seasonally weak period and people don’t know really what to do,” Hatfield told CNBC. Investors are “alternating between selling tech and selling the rest of the market.”
Enhance Portfolio Nasdaq Income Potential With QQQI
For those looking to maintain tech exposure through market volatility, the NEOS Nasdaq 100 High Income ETF (QQQI) provides an opportunity. The fund seeks high monthly, tax-efficient income by investing in the Nasdaq-100.
QQQI also employs an options strategy using covered calls to generate a premium. It is up over $30 million in net flows since its launch on January 30. The premiums earned by the fund help provide a potential buffer should stocks decline.
The fund offers layers of tax efficiency for investors seeking income. The options that QQQI uses are call options on the NDX and qualify as section 1256 contracts. These receive favorable tax treatment under IRS rules. The options held at year’s end are treated as if sold on at fair market value on the last market day. Any capital gains or losses are taxed at 60% long-term and 40% short-term, no matter how long they were held.
Should equities rise or fall, NEOS can actively manage the call options to capture gains in the underlying assets or minimize losses. In addition, the fund’s managers also engage in tax-loss harvesting opportunities throughout the year on the call options, equity holdings, or both.
QQQI has an expense ratio of 0.68%.
For more news, information, and analysis, visit the Tax-Efficient Income Channel.