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👉 SYPI's 3-Year Anniversary

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Happy Friday.

Every once in a while, we co-publish analysis written by other accomplished analysts. We’ve been co-publishing Nicholas Bratto’s analysis for the last few months — and have continued to receive very positive feedback.

Nick tends to publish analysis to his Seeking Alpha profile focused on dividends — and was the first analyst to publish research on QQQI. This ETF then went on to win the 2025 Best New Active ETF Award from ETF.com.

Enjoy this incredible analysis on SPYI — the NEOS S&P 500 High Income ETF — written by Nicholas Bratto!

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SYPI’s 3-Year Milestone:

Dominating S&P 500 Covered Call ETFs With Superior Returns and Tax Efficiency

  • Despite 2025's market correction, SPYI recovered, achieving a 9.76% YTD return, trailing closely behind the S&P 500s 10.76% return.

  • SPYI has delivered a 50.58% total return since its 2022 inception, outperforming XYLD and JEPI by over 20% and 17% respectively, with more NAV appreciation.

  • SPYI’s distributions, primarily classified as Return of Capital, offer superior tax efficiency over JEPI’s ordinary income tax classification, further improving net real returns for investors.

  • I use SPYI in my investment portfolio, along side my dividend growth and speculative growth holdings, to stabilize my business income and help offset my core living expenses .

Introduction

I've been covering the NEOS S&P 500 High Income ETF for a few years now, in the beginning with some skepticism given my experience with other covered call ETFs like the Global X S&P 500 Covered Call ETF (XYLD) and the JPMorgan Equity Premium Income ETF (JEPI).

This past Labor Day weekend marks the three year anniversary of SPYI.

Since inception, I've grown more and more comfortable with the fund as it's demonstrated the ability to achieve its objectives: high, consistent, tax-efficient monthly income with the potential to capture upside in a rising market.

I believe SPYI has demonstrated dominance in the S&P 500 covered call option ETF space in achieving these objectives over funds like XYLD and JEPI based on the fund's superior returns and tax efficiency.

SPYI Returns

Since the 08/30/2022 inception, SPYI has delivered a +50.58% total return or a +16.86% annualized total return as of 08/30/2025.

Included in this total return is a +4.71% price appreciation on top of the roughly 12% TTM yield. A $10,000 investment in SPYI would produce about $100/month of income and this holds true almost any time you invest in the fund, hence the consistent monthly income objective.

It's important to monitor the NAV with covered call option funds as it has a direct impact on payouts and inflation-adjusted returns. It's encouraging to see NAV preservation and appreciation with SPYI unlike many other covered call options ETFs on the market.

Year to date, SPYI has kept up surprisingly well with the S&P 500's total return of 10.72% compared to SPYI's 9.76%, especially given the April 2025 correction.

Corrections and crashes are typically where covered call funds begin to fall behind their underlying index, but the options overlay strategy employed by the fund captured most of the upside — allowing SPYI to recover nicely along the S&P 500 in June and beyond.

Interestingly enough, there were even times of outperformance during the month of April.

S&P 500 Covered Call ETFs: SPYI vs XYLD vs JEPI

SPYI has outperformed both XYLD and JEPI significantly, by over +20% and 17% +more, respectively, while also showing higher price appreciation.

SPYI started to pull away from XYLD and JEPI during 2024's bull run. While all three funds corrected in April 2025, SPYI is the only one that not only completely recovered from the correction, but has continued growing significantly more.

SPYI has amassed $4.93B AUM, more than XYLD's $3.08B AUM. With that being said, they’ve only amassed a fraction of the very popular JEPI fund who’s sitting on a whopping $41.20B AUM. Given SPYI's significant outperformance, I don't understand how JEPI has 10x the AUM, when SPYI and even XYLD are also more tax-efficient, making the performance gap even wider when you calculate the net real returns for your individual tax situation.

SPYI, like all the NEOS High Income ETFs, uses multiple methods to create tax efficiency:

  • Qualified dividend income of the underlying holdings

  • Use of index options which are taxed 60% long-term/40% short-term capital gains

  • Tax-loss harvesting which helps classify > 90% of the distributions as Return of Capital (ROC) which are essentially deferred long-term capital gains once your cost basis goes to zero.

XYLD's distributions are mostly classified as ROC as well, but its total return has significantly lagged SPYI.

JEPI hasn't performed much better than XYLD and JEPIs distributions are primarily taxed as ordinary income vs. SPYI distributions primarily being classified as ROC.

Between SPYI's total returns and tax efficiency, SPYI is the clear winner here.

Risk Analysis

The primary risk I track with SPYI is if my purchasing power will keep up with or out pace inflation.

SPYI is still relatively young, so payout growth data is sparse, but we can set an expectation up front to require an average +3% increase in payouts over time. So far, SPYI's payouts have kept up with inflation and an initial $300,000 investment at inception, how much I would be willing to invest to make $3,000 to survive debt-free, would be worth around $335,000 — simply more than $300,000 adjusted for inflation today as shown below.

However, the jury is still out to see how 2025 will perform. Average 2025 payouts are slightly under where I would like them to be.

I projected out in the below chart that 2025's payouts would need to be over $0.52/share to stay on track to achieve a 3% annualized raise, starting from 2023's full year of performance. From 2024 to 2025, we only need a payout increase of 0.35% to maintain the 3% annual raise, since 2024 saw a 5.72% increase. I calculate the desired payout of $6.13975 for 2025 by multiplying 2023's payment of $5.7873*1.03^2.

It's not likely 2025 will hit a payout of $6.14/share. Not leaving anything to chance, investors relying on the income from these funds can mitigate this slight inflation risk by reinvesting unspent distributions each month. Investors can also reinvest the higher than expected payout growth of distribution over 3% each year.

For example, since 2024's annual payout growth was 5.72%, you should reinvest the 2.72% increase so in down years like 2025, your purchasing power continues keeping up with inflation.

So long as the NAV continues to steadily rise, I'm confident payouts will increase over time as the fund managers target a 1% of NAV distribution per month.

Outlook

I personally own a little over $10,000 of SPYI and enjoy the ~$100/month I receive from the funds 12% yield.

SPYI is a part of my business dividend strategy: I invest all my business profits into dividend ETFs to stabilize my small business income and offset my bills.

I also own other NEOS funds like NEOS Nasdaq-100 High Income ETF (QQQI), NEOS Russell 2000 High Income ETF (IWMI), NEOS Bitcoin High Income ETF (BTCI), NEOS Real Estate High Income ETF (IYRI), and NEOS Gold High Income ETF (IAUI) for added diversification and yield.

This is in addition to my personal taxable brokerage account portfolio, which is mostly dividend growth ETFs and a few highly speculative growth plays I initiated once I hit my goal of having $100,000 in dividend growth stocks. My ultimate goal is to offset my $3,000 monthly core living expenses, which are never going away and necessary to survive, with dividend income from both accounts to achieve financial security.

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