QQQI: A Strategic Reassessment Amidst Changing Market Dynamics

In an era of persistent market volatility and shifting investor priorities, the NEOS Nasdaq 100 High Income ETF (QQQI) has emerged as a compelling tool for risk-rebalancing and capital preservation. Designed to generate high monthly income while offering downside protection, QQQI's unique blend of Nasdaq-100 exposure and options-based strategies has attracted income-focused investors seeking resilience in uncertain markets. As of September 2025, the fund's 7.54% year-to-date return and 14.33% annualized return over the past 12 monthsNEOS Nasdaq 100 High Income ETF (QQQI) - Stock -^[1] underscore its appeal, but its true value lies in its ability to navigate market turbulence—a critical consideration as investors reassess their portfolios amid evolving dynamics.

A Dual-Pronged Strategy: Income and Protection

QQQI's architecture is built on a two-part options strategy: selling covered calls and purchasing protective putsNEOS Nasdaq 100 High Income ETF (QQQI) - Stock -^[1]. This approach allows the fund to generate consistent income while capping potential losses during downturns. For instance, during the April 2025 market selloff—when the Nasdaq-100 plummeted 16%—QQQI's protective put options limited its drawdown to 20.00%QQQI – Risk – NEOS Nasdaq-100 (R) High Income ETF | Morningstar -^[3], a performance that outpaced many of its peers. The fund's covered call strategy, which involves selling options 3-5% out of the moneyQQQI - Nasdaq-100 High Income ETF | NEOS -^[4], further enhances returns by capturing premiums while retaining upside potential in rising markets.

This duality is particularly valuable in today's environment, where inflationary pressures and geopolitical risks have heightened volatility. QQQI's 20-day volatility of 9.19%NEOS Nasdaq 100 High Income ETF (QQQI) - Stock -^[1] (compared to QQQ's 8.22% as of September 15, 2025NEOS Nasdaq 100 High Income ETF (QQQI) - Stock -^[1]) reflects its slightly higher risk profile, but its Sharpe ratio of 0.67NEOS Nasdaq 100 High Income ETF (QQQI) - Stock -^[1]—ranking it in the top 24% of ETFs—demonstrates strong risk-adjusted returns. The fund's active management and tax-efficient structure, including Section 1256 contractsQQQI - Nasdaq-100 High Income ETF | NEOS -^[4], further enhance its attractiveness for investors prioritizing capital preservation.

Risk Metrics and Portfolio Composition: A Closer Look

QQQI's portfolio is heavily concentrated in technology, with its top 10 holdings—led by NVIDIA (9.52%), Apple (8.30%), and Microsoft (8.20%)—accounting for 52.06% of assetsNEOS Nasdaq 100 High Income ETF (QQQI) - Stock -^[1]. While this concentration amplifies exposure to sector-specific risks, the fund's options strategy acts as a buffer. For example, during the April 2025 downturn, the protective puts offset declines in its tech-heavy holdings, while the covered calls provided a steady income streamNEOS Nasdaq 100 High Income ETF (QQQI) - Stock -^[1].

The fund's expense ratio of 0.68%NEOS Nasdaq 100 High Income ETF (QQQI) - Stock -^[1] is moderate for an actively managed ETF, and its rebalancing mechanisms—monthly adjustments to options positions—ensure alignment with its dual objectives of income and downside mitigationQQQI - Nasdaq-100 High Income ETF | NEOS -^[4]. However, investors should note that QQQI's leverage and derivatives exposure are not explicitly disclosedNEOS Nasdaq 100 High Income ETF (QQQI) - Stock -^[1], a factor that warrants further scrutiny for risk-averse portfolios.

Capital Preservation in Action: Lessons from 2024-2025

QQQI's performance during the 2024-2025 downturn offers a case study in capital preservation. While the Nasdaq-100 fell 16% in April 2025, QQQI's protective puts reduced the effective loss, and its covered call strategy continued to generate incomeNEOS Nasdaq 100 High Income ETF (QQQI) - Stock -^[1]. This resilience has allowed the fund to outperform similar products like JEPQ and QYLD during volatile periodsQQQI: An Award-Winning Income Strategy - Benzinga -^[2], a testament to its strategic design.

Moreover, QQQI's tax loss harvesting capabilitiesQQQI - Nasdaq-100 High Income ETF | NEOS -^[4] add another layer of protection. By realizing losses in down markets, the fund enhances after-tax returns—a feature that becomes increasingly valuable as investors seek to optimize yields in a low-growth environment.

Strategic Implications for Investors

As markets grapple with macroeconomic uncertainty, QQQI's hybrid approach offers a compelling solution for risk-rebalancing. Its ability to generate income while mitigating downside risk makes it a versatile tool for both conservative and growth-oriented portfolios. However, investors must weigh its volatility and sector concentration against their risk tolerance. For those prioritizing capital preservation, QQQI's options strategy provides a robust framework, but diversification across asset classes remains essential.

In conclusion, QQQI represents a nuanced response to the challenges of modern investing. By combining Nasdaq-100 exposure with a disciplined options strategy, it addresses the dual imperatives of income generation and risk management. As market dynamics continue to evolve, QQQI's adaptability and performance track record position it as a strategic asset for investors navigating the complexities of 2025 and beyond.