QQQI: Double-Digit Yield With Big Tech Power

TL;DR

If you want monthly income that currently pencils out to the mid-teens while still riding with the Nasdaq-100’s biggest winners, QQQI (NEOS Nasdaq-100 High Income ETF) is one of the cleanest, most tax-aware ways to do it. It owns the Nasdaq-100 stocks and layers index call spreads on NDX to generate cash flow, aiming to keep a slice of upside while managing taxes via Section 1256 and heavy return-of-capital (ROC) distributions. As of July 31, 2025, QQQI’s distribution rate was 14.56% (month-to-month variable) on a fund that’s grown to roughly $3.9B AUM. Understand that distribution ≠ guaranteed yield, and your upside is deliberately muted versus plain-vanilla QQQ. NEOS Investments

What QQQI Is—And What Makes It Different

QQQI is an actively managed ETF launched in January 2024 that invests in the constituents of the Nasdaq-100 (think NVDA, MSFT, AAPL, AVGO, AMZN) and overlays a systematic NDX® call-spread strategy. In plain English: it owns the tech leaders, then repeatedly sells index calls and may buy further-out calls to cap risk, targeting net option premium income each month while keeping some upside potential. Expense ratio is 0.68%. NEOS Investments

Mechanically, the fund writes cash-settled, European-style options on the NDX index—not on shares—so there’s no early assignment risk, and the contracts are treated under IRC Section 1256 (the “60/40” tax split, plus end-of-year mark-to-market). That’s a material design choice for after-tax results. NEOS InvestmentsNasdaqSchwab Brokerage

The Income Engine (And Why It Can Look “Too Good”)

The most recent headline number investors notice is the distribution rate—again, 14.56% as of July 31, 2025—which annualizes the latest monthly payout relative to NAV. Because QQQI’s cash flow largely comes from option premium, the fund’s SEC 30-day yield can be near zero (it was 0.07% as of June 30, 2025). That’s not a contradiction; it reflects the SEC’s narrow formula, which doesn’t count option proceeds as “income.” NEOS Investments

Important nuance: distribution rate ≠ guaranteed forward yield. It’s a snapshot based on the latest payout, which in turn depends on volatility, option strikes, and realized paths. NEOS spells out these definitions right on the fund page. NEOS Investments

Why tax treatment matters

Because QQQI relies on broad-based index options, gains/losses from the option book generally receive 60% long-term / 40% short-term capital-gains tax treatment and are marked to market at year-end—often improving tax efficiency versus ETFs writing American-style single-stock or ETF options. NEOS explicitly built for this by using NDX options. NEOS InvestmentsCboe Global MarketsTurboTax

On distributions, NEOS currently estimates 100% of QQQI’s payouts as ROC (subject to change and detailed each month via 19a-1 notices). ROC isn’t “free money”—it reduces your cost basis and defers taxes until sale—but it can materially improve after-tax cash flow for many investors in taxable accounts. NEOS Investments

What You Own: Big Tech, Concentrated Where The Action Is

QQQI’s equity sleeve mirrors the Nasdaq-100, so you get the familiar mega-cap mix. Recent holdings data show NVIDIA at ~10%, Microsoft ~8.7%, Apple ~7.9%, Broadcom ~5.5%, Amazon ~5%, with the top-10 near ~52% of assets—i.e., classic, growth-tilted concentration. StockAnalysis

That concentration is a feature if you want income and exposure to the innovation leaders. It’s a risk if you prefer broader diversification.

Results So Far

It’s still a relatively young fund, but NEOS reports the following at quarter-end:

1-Year Total Return: 16.35% (to 6/30/2025)
Since Inception Total Return: 18.63% (inception 1/29/2024)
Distribution Rate: 14.56% (7/31/2025)
AUM: about $3.94B (8/15/2025 lineup table) NEOS Investments

As always, past performance ≠ future results, and options-income funds can diverge meaningfully from QQQ depending on market path.

How QQQI Compares To The Crowd

Covered-call (and option-income) ETFs aren’t new. What matters is the underlying index, the option instrument, how much is overwritten, and how dynamically it’s managed.

QQQI vs. QYLD (Global X Nasdaq-100 Covered Call)

QYLD mechanically writes at-the-money calls on the Nasdaq-100 each month, typically on 100% of its notional, which maximizes premium but chops most upside in strong rallies.
QYLD’s recent trailing 12-mo distribution hovered around the low-to-mid-teens and its SEC 30-day yield was 0.17% in mid-August (again, because option premium isn’t counted).
QQQI, by contrast, is active, uses NDX index call spreads, and intends to leave some upside capture. Global X ETFs+1

QQQI vs. JEPQ (JPMorgan Nasdaq Equity Premium Income)

JEPQ mixes a growth-stock portfolio with an ELN-based options overlay (functionally covered-call exposure), delivering monthly income with less volatility than QQQ, but still capping upside.
Typical headline yield sits around ~9–11% depending on period; recent forward/trailing measures have been in that zip code.
QQQI’s key differentiator: NDX options & 1256 tax treatment, plus its call-spread approach for some upside participation. J.P. MorganNasdaqStockAnalysis

QQQI vs. QQQY (Defiance Nasdaq-100 0DTE Put-Write)

QQQY is a 0-DTE (daily) options strategy with eye-popping weekly distributions and enormous headline yields, but a very different risk profile (short daily puts, path dependence, potentially high turnover).
If you want hefty, fast-moving cash flows and accept greater path risk, QQQY scratches that itch; if you prefer NDX call spreads + equity ownership and tax nuance, QQQI is tighter to a buy-write feel. Defiance ETFsStockAnalysis

Where The Yield Comes From (And When It Shrinks)

Option-income funds are volatility-sensitive. Higher implied volatility (IV) tends to inflate premiums, boosting distributions; low IV compresses them. Strategy design matters too:

Overwrite level (0–100% of notional)
Strike selection (ATM vs OTM)
Use of spreads (buying calls to shape payoff)
Re-hedging cadence (active vs calendar)

QQQI’s prospectus gives the advisor latitude to manage the sold calls and bought calls to pursue a net credit each month and adjust in fast markets—i.e., it’s not locked into a rigid one-size overlay. NEOS Investments

The Tax Angle: 60/40 And ROC, Explained Simply

Section 1256 is the sleeper advantage for index-option funds. By using NDX calls (broad-based index), QQQI can have gains taxed 60% long-term / 40% short-term and is mark-to-market at year-end, which often beats the all-short-term rate many investors face on short-dated, American-style options. That doesn’t guarantee lower taxes for every investor—but it’s a meaningful design choice. NEOS InvestmentsCboe Global MarketsTurboTax

Meanwhile, the fund has been classifying 100% of recent distributions as ROC, which defers taxes by lowering your cost basis rather than generating immediate taxable income. ROC is not inherently destructive; its impact depends on whether NAV is being eroded over time. Always read the 19a-1 notices to understand how a given month’s payout was sourced. NEOS Investments

When QQQI Can Underperform (Know Your Trade-Offs)

Rip-roaring bull runs:
Call overlays cap upside. In a melt-up (AI mania, multiple expansion), you’ll almost certainly lag QQQ on total return. The “income” is the trade-off for giving away a slice of future gains. (This is true across covered-call strategies.) Investopedia
Volatility crush:
When IV falls, option income shrinks, and so do distributions. Your headline “yield” can wobble month-to-month.
Sharp bear legs:
Covered calls soften some downside via premium, but they’re not crash insurance. In fast drawdowns, NAV still drops and distributions can compress. Strategy management (e.g., using call spreads) helps shape the payoff, but it doesn’t eliminate equity risk.
Tech concentration risk:
The Nasdaq-100’s sector tilt (semis, software, platforms) is a strength in growth regimes and a weakness when big tech de-rates.

A Concrete Income Picture (Just Math, Not A Promise)

Suppose you invested $100,000.
Using the 14.56% July distribution rate as a ballpark, you’d annualize to ~$14,560, or about ~$1,213/month.

Reality check: distributions float with volatility and strategy inputs; future months can be higher or lower. Consider this a planning placeholder, not a guarantee. NEOS Investments

Portfolio Fit: Who Might Consider QQQI?

Income-first growth holders who want cash flow from tech leadership without abandoning the sector.
Taxable-account investors who value 1256 treatment on option gains and ROC-heavy distributions that defer taxes.
Retirees seeking monthly cash flow, accepting muted upside versus QQQ in exchange for a smoother income stream.
Diversifiers pairing QQQI with dividend growth, core bond, or low-volatility sleeves to shape total portfolio drawdowns.

Not a fit if you:

Want max upside beta to Nasdaq—plain QQQ (or individual leaders) will likely outrun QQQI in bull surges.
Need predictable fixed coupons (that’s what bonds are for).
Prefer broad diversification across sectors; QQQI is tech-heavy by design.

QQQI vs. “The Big Three” At A Glance

Feature	QQQI	JEPQ	QYLD
Underlying	Nasdaq-100 stocks	Nasdaq-100 tilt	Nasdaq-100 stocks
Options	NDX index call spreads (active)	Options via ELNs (active)	ATM index calls on 100% notional (rules-based)
Tax angle	1256 / 60-40, cash-settled index options	ELNs; not pure index-options tax	Covered calls on index; distributions vary
Payout cadence	Monthly (variable)	Monthly (variable)	Monthly (variable)
Recent headline	14.56% distribution rate (7/31/25)	~9–11% area (varies by source/date)	~12–14% trailing; SEC 30-day 0.17% (8/15/25)
“Feel”	Income + some upside kept	Income + lower beta vs QQQ	Max premium, most upside capped

Sources: NEOS (QQQI page & prospectus), JPMorgan fact sheets, Global X pages, Nasdaq/MarketChameleon for current yield snapshots; verify dates before acting. NEOS Investments+1J.P. MorganNasdaqGlobal X ETFs

Implementation Tips

Size it like an income sleeve, not a core growth replacement.
If your goal is cash flow from big tech without full beta, a 5–15% allocation of an equity sleeve is common in income-tilted builds (not advice—just a framing).
Blend to control path risk.
Pair QQQI with dividend growth ETFs, short-duration Treasuries, or quality factor funds to buffer volatility when tech sneezes.
Mind taxes and basis.
Track ROC-driven basis reductions and keep an eye on Form 6781 reporting for 1256 contracts when you review year-end tax docs. (Consult a pro.)
Expect variability.
Distributions will ebb and flow with volatility. Don’t anchor on a single month.

The Fine Print—But In Plain English

Expense ratio: 0.68%. You’re paying for active options management and tax-aware design. NEOS Investments
Liquidity/AUM: Near-$4B and heavily traded—bid/ask spreads have tightened as assets scaled. NEOS Investments
Holdings drift: Still the Nasdaq-100 at heart—meaning heavy exposure to NVDA/MSFT/AAPL/AVGO/AMZN as of recent disclosures. StockAnalysis
Performance snapshots: 1-yr and since-inception stats are quarter-end marks; your mileage will vary with entry point and market path. NEOS Investments

Bottom Line

If you’re trying to turn Big Tech’s volatility into a paycheck, QQQI is a thoughtful, tax-aware tool: NDX index call spreads for income, ROC-heavy monthly distributions, and Section 1256 treatment on the options overlay. You are trading away a chunk of upside for that cash flow—no different from any covered-call-style approach—but QQQI’s active design and 1256 focus make it a standout in a crowded category.

For investors who prioritize income yet still want seats on the AI-era growth train, QQQI earns a serious look—with eyes open to the trade-offs that fund your mailbox money. NEOS Investments+1

Disclosures & Sources:

NEOS QQQI prospectus (strategy, fees, Section 1256, mechanics). NEOS Investments
NEOS fund page / lineup (distribution rate 14.56% on 7/31/25; SEC yield 0.07% on 6/30/25; AUM lineup table; ROC estimate 100%). NEOS Investments
Holdings mix (recent top weights). StockAnalysis
Index-options tax/structure references (1256 and cash-settled European-style features). Cboe Global MarketsNasdaq
Peer context: JEPQ fact sheet; QYLD distributions/SEC yield. J.P. MorganGlobal X ETFs