Higher S&P 500 Earnings Could Benefit This Active ETF

The expectation of higher corporate earnings in 2024 could help prop up the actively managed NEOS S&P 500 High Income ETF (SPYI). Of course, capital markets are brimming with optimism, with the expectation of rate cuts to come.

When those actual rate cuts come and the pace at which they will happen is anybody’s guess, but institutional investors are banking on higher corporate earnings. Global investment firm Goldman Sachs, for example, is forecasting that S&P 500 earnings will rise 5% to a $237 earnings per share estimate, which in comparison, is $6 higher than the average estimates of strategists tracked by Bloomberg.

“We see potential upside to our EPS estimate from stronger US economic growth, lower interest rates, and a weaker dollar,” said Goldman Sachs chief U.S. equity strategist David Kostin.

If those estimates hold, it could provide upside for SPYI. With its active management, the fund allows investors to tap into the talent and deep experience of its portfolio management team. With its concentration on call options, investors in the ETF can leave this complexity to professionals who can navigate through these markets with relative accuracy and efficiency.

When you pop the hood of SPYI, its holdings primarily consist of the “Magnificent Seven.” As such, names include Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, and Meta Platforms.