At a Glance
- Goldman Sachs is buying ETF firm Neos for $2.25 billion
- Neos runs covered-call funds paying yields above 12%
- The strategy trades away big gains for steady income
- Analysts say retirees, not market timing, are driving demand
Goldman is doubling down on income-hungry retirees.
Goldman Sachs just agreed to buy Neos, a fast-growing ETF firm known for its high-yield “covered call” funds, in a $2.25 billion deal. The move adds to Goldman’s growing bet on products investors have nicknamed “boomer candy.”
Key Details
Neos runs more than a dozen funds, including the $14 billion Neos Nasdaq 100 High Income ETF and the Neos S&P 500 High Income ETF, both paying distribution rates above 12%. The funds hold stocks like a typical index fund but sell call options on top to generate extra income. Over the past three years, the S&P 500 version returned 16.7% annually versus 21% for the index itself – the tradeoff for that steady payout.
Why It Matters
CFRA analyst Aniket Ullal says the appeal isn’t about timing the market – it’s demographics. Retirees sitting on roughly $3 trillion in low-yield money-market funds (currently around 3.7%) are chasing higher income, even if it means capping upside. But the funds still carry real stock market risk. If prices climb too fast, gains get capped. If the market drops, investors absorb the losses with none of the cushion bonds typically offer.
What to Watch
Whether Goldman scales Neos’s playbook and whether investor appetite for yield outlasts the next real downturn.
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Source: Barrons.com
