IWMI ETF sees inflows after Russell 2000 rally, 14.6% yield
Russell 2000’s 13.1% gain through April has lifted interest in NEOS’s IWMI, an $806 million options ETF that yields 14.58% and holds heavy exposure to U.S. small-cap revenue.
Through the first four months of 2026 the Russell 2000 Index rose 13.1%, compared with a 5.7% return for the S&P 500, and that performance has drawn attention to the NEOS Russell 2000 High Income ETF (IWMI). The fund has about $806 million in assets, a distribution rate of 14.58% and substantial exposure to companies that derive most of their revenue from the U.S.
Plain-vanilla ETFs that track the Russell 2000 report dividend yields near 0.91%, while IWMI uses an options overlay to generate higher cash distributions. The options strategy is paired with equity exposure to U.S.-focused small companies rather than international or large-cap firms.
IWMI will mark its second anniversary next month. NEOS reports the fund has produced a high distribution rate and has posted a positive year-to-date return. NEOS also reports the fund’s options approach has not produced extreme net asset value erosion or left investors with effectively capped upside, outcomes that can occur with some high-yield options strategies.
The fund’s domestic revenue tilt is a factor for currency exposure. The Carson Group calculated that roughly 77% of small-cap revenue is domestic versus less than 60% for large caps. After a sharp decline in early 2025, the U.S. dollar has appreciated in recent months; the firm said a stronger dollar can pressure multinational earnings while supporting companies that sell mainly into the U.S.
The Carson Group also calculated that small-cap stocks still lagged large caps by more than 7% annualized over the past five years and trade at least 20% cheaper than large-cap peers after adjusting for historical premiums or discounts. The group noted that periods of market volatility often prompt investors to rotate capital across asset classes, which can shift demand for small-cap and income-focused strategies.
IWMI combines an options-based income sleeve with concentrated exposure to U.S.-revenue small-cap stocks. The fund’s size, distribution rate and domestic revenue profile differentiate it from basic Russell 2000 ETFs that offer much lower dividend yields.
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