ETF of the Week ETF of the Week: NEOS Russell 2000 High Income ETF (IWMI)
Feb 12, 2026
Todd Rosenbluth, Head of Research at VettaFi, a specialist in ETF and income strategy analysis. He revisits the NEOS Russell 2000 High Income ETF and explains its options-index approach and 14% yield. They discuss fund growth, NEOS’s scale, small-cap interest, capacity concerns for options-overlay funds, and due diligence steps for investors.
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Income Draws Flows To Small-Cap ETF
- IWMI attracted over $600 million because investors prefer small-cap exposure with substantial income.
- NEOS uses index options to deliver a high yield (about 14%) while maintaining tax efficiency and scale.
Options Overlay Raises Yield And Dampens Downside
- Small caps typically pay low dividends, so options overlays can meaningfully boost yield.
- Options-based income can also provide some downside protection during volatile periods.
Different Objectives Need Different Benchmarks
- Comparing income-generating ETFs to unhedged benchmarks is often inappropriate due to different objectives.
- IWMI has tracked IWM closely in a rising market while delivering income, showing alternative return paths.