What is a derivative income ETF?

A derivative income ETF uses financial instruments like options alongside stocks to generate additional returns through premium collection rather than solely relying on dividends or capital growth. Both QQQI and QYLD fall into this category, seeking to produce regular distributions by writing call options on their underlying holdings. This structure distinguishes them from traditional passive index funds, as their performance depends heavily on specific option strategies and market conditions.

Why does the option strategy affect capital appreciation?

When a covered call ETF writes call options, it receives premiums but agrees to sell underlying shares at a set price. This effectively caps the potential upside of the portfolio in a strong bull market because gains beyond the strike price are forfeited to the option holder. Consequently, while distributions may be high, capital appreciation is generally limited compared to a standard index-tracking fund.

What does a 'capped' return imply for growth?

A 'capped' return means the investment's ability to grow significantly is restricted, particularly during market rallies. By selling call options, the fund trades some upside potential for immediate income (the premium). For QYLD, this characteristic is a primary consideration, as it prioritises steady distributions over the full capital appreciation seen in a plain-vanilla Nasdaq 100 index fund.

What are the expense ratio differences?

According to the data, QQQI charges an expense ratio of 0.68%, while QYLD charges 0.60%. This results in a 0.08% difference in annual fees. Although this percentage appears small, it directly reduces the gross return of the investment. For QQQI, the slightly higher fee is associated with its active derivative strategy, whereas QYLD's lower cost reflects its established operational structure.

How do dividend yields differ?

The data indicates that QQQI offers a dividend yield of 13.72%, which is notably higher than QYLD's yield of 11.50%. Both figures are significantly elevated compared to standard equity ETFs because the funds distribute the option premiums they collect. Investors should note that a higher yield does not always mean a better investment, as yields can fluctuate based on option pricing and market volatility.

Which goal suits each fund?

These funds are typically associated with generating regular income from the Nasdaq 100 index. QQQI is described as enhancing income for capital preservation goals, appealing to investors seeking current cash flow. QYLD is also an income-focused vehicle but prioritises lower costs and extensive historical performance. Neither fund is designed primarily for aggressive long-term capital growth due to their option writing strategies.

How do their track records compare?

QYLD has a much longer operating history, having been established on 12 December 2013. This provides extensive historical data for analysing its performance. In contrast, QQQI was inceptioned on 30 January 2024, meaning it has very little historical data available. Investors comparing the two must weigh the certainty of a long track record against the novelty and specific high-yield structure of the newer fund.

How large are the asset bases?

Net assets indicate the size of each fund. QQQI holds massive net assets of $14.8 billion, which provides exceptional liquidity for large trades. QYLD is also large, with solid net assets of $8.5 billion, ensuring reasonable trading liquidity and efficiency. Both funds are substantial enough to avoid the liquidity risks often associated with very small, emerging ETFs.

Do the top holdings overlap?

Yes, the top 10 holdings of both funds are identical in composition: NVDA, AAPL, MSFT, MU, AMZN, AMD, META, GOOGL, GOOG, and TSLA. This indicates that both ETFs maintain very similar core equity exposure to major technology and growth companies, tracking the Nasdaq 100. The differentiation lies more in their fee structures, inception dates, and specific derivative implementations than in their stock selection.

What sector risks are present?

Both QQQI and QYLD exhibit significant concentration in technology firms, as indicated by their top ten holdings. This creates exposure to sector-specific risks where a downturn in the tech industry could impact both funds. The data notes that QYLD's concentrated exposure amplifies this risk, while QQQI's top ten holdings are characterised by significant weightings in high-valuation technology firms.

What data is unavailable in this comparison?

For both QQQI and QYLD, the sector weights are not available in the current dataset. Additionally, while both funds are categorized as derivative income and track the Nasdaq 100, the specific index tracked by each is not provided in the data. Investors would need to consult individual fund prospectuses or the issuer websites for this granular breakdown of asset allocation.

What does derivative classification imply?

The category for both funds is 'Derivative Income'. This implies they are not standard equity funds. The data specifically highlights that for QQQI, this derivative income classification introduces specific risks that are distinct from standard ETFs. These risks relate to option strategies, counterparty interactions, and the complexity of the income generation mechanism.

QQQI vs QYLD

Two funds, one decision: we compare cost, performance and what each ETF actually holds in September 2026.

Compare QQQI and QYLD, both Nasdaq 100 income ETFs. Review fees (0.68% vs 0.60%), net assets, dividend yields (13.72% vs 11.50%), and holdings. Both track the Nasdaq 100 using derivatives for income, with similar top tech holdings. Educational content, not financial advice.

Fund Snapshot

Key Fund Metrics

QQQI

Metric

QYLD

0.68%

Expense Ratio

0.60%

13.72%

Dividend Yield

11.50%

$14.80B

Net Assets

$8.48B

107

Holdings

104

Jan 30, 2024

Inception Date

Dec 12, 2013

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Index Tracked

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Derivative Income

Fund Category

Derivative Income

QYLD costs about $8.00 less per year for every $10,000 invested.

Shared Top Holdings

Holding	QQQI	QYLD
NVDANVIDIA Corporation	8.43%	8.54%
AAPLApple Inc.	7.77%	7.82%
MSFTMicrosoft Corporation	5.86%	5.84%
MUMicron Technology, Inc.	4.82%	5.05%
AMZNAmazon.com, Inc.	4.29%	4.36%
AMDAdvanced Micro Devices, Inc.	3.90%	4.02%
METAMeta Platforms, Inc.	3.21%	3.15%
GOOGLAlphabet Inc.	3.21%	3.27%
GOOGAlphabet Inc.	2.97%	3.02%
TSLATesla, Inc.	2.91%	3.05%

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Investment Analysis

QQQI

Pros

High 13.72% dividend yield enhances income for capital preservation goals.
Massive $14.8 billion net assets provide exceptional liquidity for large trades.
0.68% expense ratio is competitive for active derivative strategies and income funds.

Considerations

Recent Jan 2024 inception limits historical performance data for long-term assessment.
Derivative income classification introduces specific risks distinct from standard ETFs.
Top ten holdings include significant weightings in high-valuation technology firms.

QYLD

Pros

Dec 2013 inception date provides extensive historical data for performance analysis.
Lower 0.60% expense ratio reduces overall cost drag on investor returns.
Solid $8.5 billion net assets ensure reasonable trading liquidity and efficiency.

Considerations

11.50% dividend yield is notably lower than comparable newer covered call ETFs.
Capped upside participation may limit capital appreciation in strong bull markets.
Concentrated exposure to the Nasdaq 100 amplifies sector-specific technology risk.

About QQQI and QYLD

QQQI (QQQI)

The NEOS NASDAQ 100 High Income ETF (QQQI) is a derivative income fund designed to offer investors exposure to the technology-heavy NASDAQ 100 index while generating substantial current income. Launched in January 2024, this ETF holds a diversified portfolio of 107 assets, primarily focusing on large-cap technology and growth companies. Its distinguishing feature is the systematic writing of covered call options on the underlying index, a strategy intended to harvest premium income that is distributed to shareholders. With a reported dividend yield of approximately 13.72%, it appeals to those seeking regular cash flow alongside potential capital appreciation. However, investors should note that the covered call strategy may limit upside potential during strong market rallies. The fund has an expense ratio of 0.68%, which is moderate for a derivative-based product. As with all investments, capital is at risk, and values can fluctuate due to market conditions.

QYLD (QYLD)

The Global X Nasdaq 100 Covered Call ETF (QYLD) is a derivative income fund designed to generate regular distributions for investors. Rather than simply tracking the price of the Nasdaq 100, it employs a covered call strategy, holding the underlying index components while selling monthly call options against them. This approach aims to capture premium income, which is reflected in its current dividend yield of 11.50%. The fund holds 104 holdings and carries an expense ratio of 0.60%. While the strategy can provide attractive income, it may limit capital appreciation potential during strong market rallies, as gains are often capped by the sold options. Investors should note that values can fall as well as rise, and income distributions are not guaranteed.

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QQQI vs QYLD

Fund Snapshot