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Neos has a suite of high-yielding derivative income funds. They are not crazy high-yielding, just high-yielding. SPYI uses the S&P 500 as a reference security, and it yields 11%. QQQI uses QQQ as its reference security and yields 13%. 

They just launched the Neos Long/Short Equity Income Fund (NLSI). That sounds interesting, although admittedly, they are all interesting or at least fun to look at. From the prospectus, it looks like the stock picking will be bottom-up for both the long names and the short names. On top of that, it will sell put spreads on the S&P 500 for the income component. The longs will be leveraged up to 120% with 55% being short. 

I wanted to model out, and this is what I came up with.
 

XYLG sells calls on half the portfolio, and HDGE is a stock-picking short fund, not an inverse fund. The big step off for Portfolio 3 at the end of 2024 came a massive capital gain payout by XYLG.

If NLSI pays out something like 11%, similar to SPYI, that would be a big bogey to overcome in terms of compounding positively on a price-only basis, but QQQI has done it so far. FWIW, the distributions are expected to get favorable tax treatment for being index options. 

Let's check in on risk parity. The simple definition is leveraging up fixed income so the risk contributions of equity and fixed income are the same. There's not a lot of funds in this niche, and they do own more than just equities and fixed income. So they are multi-asset, and I think intended to be a single ticker portfolio solution like Vanguard Balanced Index (VBAIX). 
 

They are all doing well this year. AQRIX hasn't really had any struggles during the short period available to study. FAPYX's worst year was 2022, when it was down 9%. At first glance, that might seem pretty good, but that's only from August when the fund launched, and much of the decline in markets had already occurred. 

RPAR is having a good year, too, but if you have any interest in this space, I think the conclusion is that trying to index risk parity as RPAR does is not a great idea. 

I am fascinated by risk parity, but it's more intellectual curiosity than having an actual interest but it is a valid portfolio concept. I just think going heavy into duration is a tough way to make a living. 

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