SPYI's 12% distribution rate and 0.47% SEC yield are both correct. The SEC formula simply excludes option premiums, which are SPYI's primary income engine. A VIX near the 12th percentile compresses SPY call premiums, threatening SPYI's ability to sustain its payout without tapping return of capital.
Many financial professionals are salespeople paid on what they push, not whether you end up wealthier. A fiduciary is the opposite. The SEC legally requires them to put your interests first.
Advisor.com's free matching tool pairs you with vetted fiduciaries from major national firms, all in under three minutes. See who you match with today. The NEOS S&P 500 High Income ETF (BATS:SPYI) publishes two yield figures that appear to belong to different funds.
The distribution rate sits near 11.78%, while the SEC 30-day yield is 0.47%. Both are calculated correctly. The gap comes down to definitions, because the SEC formula was built for portfolios that earn coupons and dividends, and SPYI does not earn its money that way.
SPYI runs an S&P 500 index option strategy on top of an equity book that roughly tracks the index. The vast majority of what it pays out comes from selling call options, which the SEC formula treats as if it were not income at all. The fund can distribute at a double-digit rate to shareholders and still file a sub-1% number with regulators, and neither figure is misleading on its own terms.
For anyone holding SPYI, the practical question is which figure to trust. Both are backward-looking artifacts of different definitions. What actually determines next year's payout is something else entirely.
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