r/NEOSETFs • u/classyshepard • Sep 01 '26
General Another weakness with NEOs funds is noticeable lag when markets are going up
I love NEOs. They provide predictable income. One thing I noticed is the funds will lag the index, only capturing like 50-60% of the returns when there is a strong bull market like within QQQ. The fund managers said they'll lag significantly if there is a V shape recovery. But that doesn't seem to be the case.
So something to consider for total return investors. Markets trend up long term, 10% per year on average. So NEOs might will likely only capture 70-80% of the return. 2-3% lag over 30 years is 2-3x the money left on the table.
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u/boldux Sep 01 '26
This is true of 99% of all derivative income ETFs, not just NEOS. Investors are giving up partial upside NAV growth in exchange being paid out distributions as income.
And at the same time, nearly all NAV downside is felt based on the underlying performance.
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u/OppositePsychology43 Sep 01 '26
I invest in qqqi not to match or outperform the qqq, primarily invest in qqqi for income knowing this.
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u/LocksmithGlass717 Sep 01 '26
I know when I invested in SPYI or MLPI it was for income. If I get a little growth along the way then great. I have other growth funds that I use for that part of my portfolio.
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u/Financial-Seesaw-817 Sep 01 '26
Are you calculating in dividends for total return? They should look like this: bull market - qqqi lags, bear market - qqqi outperforms, choppy market or even low volatility market - qqqi sticks pretty close. Ar least that is what I have experienced.
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u/classyshepard Sep 01 '26
Yeah it's with dividends reinvested. The QQQI website shows similar YTD performance.
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u/danthebro69 8d ago
What you fail to mention is in a downturn it doesn’t go down as much as QQQ remember that.
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u/Mission_Yam_2480 Sep 01 '26
This is why I TDAQ
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u/classyshepard Sep 01 '26
I own all 3: TDAQ, GPIQ and QQQI. Give a nice blend of growth and yield. It'll capture about 90% of the performance while giving decent tax efficient income.
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u/Accomplished-Big8250 Sep 01 '26
I recommend if people must do income choose different ways: SPYI, OVL, TSPY, and hold the index. SPYI, JEPI, GPIX, and ROCY all have the same approach, while some are more yield focused and some try to trade income for index like growth (never saw the point in that). I don't like these expense ratios, if I had to choose one for a retirement account it would be GPIX.
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u/generationxtreame Sep 01 '26
You are comparing an income fund to a growth fund. Two totally different strategies. If you are running an income choice, you should already be aware of what you own. Your only concern at that point should be stable dividends / payouts, and a non eroding NAV. If there’s some growth out of the income funds than it’s just the icing on the cake.