A traditional 60/40 stock/bond portfolio has been a tried and tested strategy among financial planners. But income seekers can specifically reap the benefits of both assets with exposure to one active exchange-traded fund: the NEOS Enhanced Income Aggregate Bond ETF (BNDI).
The convenience of exposure to one ETF also means an investor needn’t constantly monitor their allocations to stocks and bonds. BNDI’s active management strategy translates to more of a set-it-and-forget-it strategy for investors. So regardless of the current macroeconomic environment, BNDI can flex with any changes.
S&P 500 Keeps Reaching New Highs
This is especially helpful now as the S&P 500 continues to push to new highs after a 2023 market rally. At the same time, the bond markets are seeing increased issuance on the prospects of rate cuts to come. So fixed income investors may want to lock in higher yields now. With BNDI, investors don’t have to worry about financial headlines, given its flexibility.
Overall, BNDI seeks to distribute monthly income generated from investing in a representative portfolio of the U.S. aggregate bond market, while at the same time implementing a data-driven put option strategy. As mentioned, active management allows BNDI to maintain pliability in any market environment, while also taking advantage of tax-loss harvesting opportunities.
To extract more income from the market and capture any upside in the S&P 500 should it continue reaching higher heights, the fund includes the sale of SPX Index options classified as section 1256 contracts, which are subject to lower 60/40 tax rates. This is also where the fund’s tax efficiency offers investors income while decreasing their tax burden, another added benefit for investors.
BNDI currently has a net expense ratio of 0.58%. The distribution yield is 5.52% (as of 12/31/23). This is calculated by multiplying the most recent distribution by 12 to annualize it, and then dividing by the net asset value of BNDI.