XSPI ETF boosts S&P 500 income, pays 16.6% distribution

NEOS launched the XSPI ETF in February. The fund holds S&P 500 equities and uses an options overlay that buys call options and sells put options to generate premium income. NEOS reports a distribution rate of 16.57% for the fund.

The overlay typically pairs purchased index call options with sold index put options at generally similar strike prices. NEOS states the structure can provide up to 150% of notional portfolio exposure and that the fund ladders out-of-the-money calls rather than writing calls on the entire portfolio to retain some upside participation.

NEOS reports the ETF’s distribution rate sits within the issuer’s target range of 15% to 18%. Since its February debut, XSPI has produced total returns of 7.13% through the reporting period covered by the issuer.

XSPI launched as the S&P 500’s cash dividend yield traded near multi-decade lows, around 1.1%. The benchmark had climbed roughly 9.84% year-to-date and reached repeated record highs. NEOS notes 2025 was the fifth consecutive year in which S&P 500 companies spent more on share repurchases than on dividends.

NEOS also markets two other boosted income ETFs, one focused on the Nasdaq-100 and another on Bitcoin. The firm describes these products as options-overlay vehicles designed to deliver higher, tax-efficient income than standard index dividend yields.

Options overlays generate premium revenue that can be distributed to shareholders. NEOS acknowledges that using options changes a portfolio’s risk and return characteristics compared with a plain index-tracking fund.

NEOS stated, “XSPI seeks boosted tax efficient monthly income through a data-driven call option overlay while aiming to maintain upside potential by laddering out-of-the-money call options and not writing calls on the entire portfolio.”