QQQI review: how the monthly income works, total return and taxes

QQQI at a glance

Dividend yield

14.0%

Total return since launch

+63%

Average per year

+19.9%

Expense ratio

0.68%

Fund size

$14.1 billion

Pays dividends

monthly

Numbers from the TopDividendETFsPRO database, updated September 27, 2026. Total return includes reinvested distributions. "Average per year" is the annualized version of that total return.

The NEOS Nasdaq-100 High Income ETF, ticker QQQI, has become one of the fastest-growing income funds since it launched at the end of January 2024. It now manages about $14.1 billion. The pitch is simple: get paid a high monthly income from the same growth-heavy companies that make up the Nasdaq-100, while keeping some of the upside.

This guide covers how QQQI actually produces that income, what it holds, what its yield and total return look like today, how the taxes work, and what a real investment could pay you each month.

How QQQI works

QQQI does two things at once.

It holds the stocks. The fund invests in the companies in the Nasdaq-100 Index, so you own a slice of names like Nvidia, Apple and Microsoft directly, not a synthetic version of them.

It sells call options on the index. On top of those stocks, QQQI runs what NEOS calls a "data-driven call option strategy" using options on the Nasdaq-100 Index itself (ticker NDX). Selling a call option brings in cash up front, called the premium. In exchange, the fund gives up some of the gains if the index rises past the option's strike price.

What makes QQQI different from an older covered call fund is that its strategy "may include both sold and purchased NDX index options." Buying some calls back, at higher strike prices, can let the fund keep part of the upside in a strong rally instead of capping it completely. How much upside it keeps depends on how the managers set up those options each month, and NEOS does not publish a fixed formula.

NEOS compares QQQI with the Cboe Nasdaq-100 BuyWrite Monthly Index (BXN), a simple benchmark that sells one-month calls near the current index level every month. It is a useful yardstick: if QQQI's active approach is working, it should hold up well against that plain covered call strategy over time.

What's inside QQQI

Because QQQI holds the Nasdaq-100, its stock portfolio is dominated by large technology and growth companies. Its five largest holdings in late September 2026 were:

That concentration cuts both ways. When big tech rallies, QQQI's stock holdings rise with it. When tech sells off, the option income cushions the fall a little, but it does not stop it. QQQI is not a defensive fund, it is a Nasdaq-100 fund with an income layer on top.

QQQI's yield, and why the SEC yield looks so low

QQQI's dividend yield is currently 14.0% in our database. NEOS reported a distribution rate of 14.39% as of August 31, 2026. It pays monthly.

If you look at the fund page you'll notice something that surprises a lot of people: the 30-day SEC yield was -0.05% on the same date. That isn't an error. The SEC yield only counts the ordinary dividends and interest the fund earns, minus its expenses. Nasdaq-100 companies pay very small dividends, and QQQI's 0.68% expense ratio eats all of that. Option premiums, which are where QQQI's income really comes from, are not counted in the SEC yield at all.

So the number to watch is the distribution rate, and next to it, the fund's total return. A high payout only helps you if the fund's value isn't shrinking to fund it. Price decay, where a fund's share price keeps sliding to pay for its distributions, is the main thing to watch with any high-yield fund. Our database currently marks QQQI's price decay as none.

QQQI's total return

Since launching in January 2024, QQQI has returned +63% with distributions reinvested, about +19.9% a year on average.

Keep the timeline in mind. QQQI has only been around for a little under three years, a period that included a strong run for large-cap tech. That is a short track record to judge any fund by, and especially an options fund, whose real test comes in sharp sell-offs and in fast, straight-up rallies, when selling calls tends to cost the most upside.

For a longer-running fund built the same way, see our SPYI guide. SPYI uses the same NEOS approach on the S&P 500 and launched in 2022.

How QQQI is taxed

Taxes are a big part of why QQQI caught on, so it's worth getting this right. This is general information, not tax advice.

Section 1256 treatment on the options

QQQI uses options on the NDX index rather than options on an ETF. Broad index options like these are Section 1256 contracts. Gains and losses on them are taxed 60% as long-term and 40% as short-term capital gains, no matter how long the option was held. Since most option trades last about a month, that split is usually better than having all of it taxed as short-term.

Return of capital distributions

NEOS states that QQQI's distributions "have been classified as a return of capital." Return of capital (ROC) is generally not taxed in the year you receive it. Instead, it lowers your cost basis in the fund. You pay tax later, when you sell, on a bigger gain. For investors holding QQQI in a taxable account, that can defer a meaningful amount of tax.

Two cautions. First, the estimated breakdown of each payment is published monthly in the fund's Section 19(a) notices, and the final classification only comes on your year-end 1099-DIV, so it can differ from the estimates. Second, ROC isn't free money: it is partly your own capital coming back to you, and the tax is deferred, not erased. In an IRA or other tax-advantaged account, none of this matters much.

NEOS also says the fund looks for tax loss harvesting opportunities, selling positions at a loss to offset gains inside the fund.

How much does $10,000 in QQQI pay?

At QQQI's current yield of 14.0%, here is what $10,000 would pay over a year if the yield holds:

To earn $1,000 a month from QQQI at today's yield, you'd need roughly $85,700 invested. Compare that with the several hundred thousand dollars it would take in a traditional dividend ETF like SCHD, and you can see why these funds are popular with people who want income now.

Just remember that the monthly payment changes. Option premiums rise when markets are volatile and shrink when they're calm, so payouts from month to month won't be identical.

Who QQQI fits, and the tradeoffs

QQQI tends to suit investors who want high monthly income, like the long-term growth potential of the Nasdaq-100, and are comfortable giving up some upside in exchange for that income.

• Upside is limited in strong rallies. Selling calls means the fund won't fully keep up with the Nasdaq-100 when it shoots higher.
• Downside is not protected. Premiums soften losses a bit, but in a real tech sell-off QQQI will fall.
• Payouts vary. Monthly income depends on option prices, which move with market volatility.
• It costs more than an index fund. The 0.68% expense ratio is much higher than a plain Nasdaq-100 fund, which is the price of the active options strategy.
• It's still young. Less than three years of history is not much to go on.

Sources

• NEOS Funds: QQQI fund page (strategy, holdings, distribution rate, SEC yield, expense ratio, 19(a) notices)
• IRS Publication 550 (Section 1256 contracts and return of capital)
• Live yield, total return, fund size and expense ratio: TopDividendETFsPRO.com database

This article is for education only and is not investment, tax or legal advice. Distributions are not guaranteed and can change or stop. Past performance does not guarantee future results. Read the fund's prospectus and talk with a tax professional before investing.