Covered Call ETFs Are Hot. Is This New Fund Worth Buying?

Plenty of new covered call exchange traded funds (ETFs) are available in 2025, and the NEOS Gold High Income ETF (BATS:IAUI) was introduced just a few months ago. The timing of this fund couldn’t be any better, it seems, as the gold price is up sharply this year.

If you like to collect passive income and expect the gold price to head higher, the IAUI ETF should be right up your alley. Now’s a perfect time to get to know the NEOS Gold High Income ETF, which has drawbacks but could still earn a permanent position in your portfolio.

Gold Is Old, but IAUI Is New

Since its inception date was June 5, 2025, the NEOS Gold High Income ETF is quite new and doesn’t have much of a history to examine. Consequently, skeptical investors may say that IAUI has new-fund risk, which is a valid concern.

Still, NEOS is a respectable fund manager and audacious traders might choose to give the NEOS Gold High Income ETF a chance. Just be sure to read the fund’s prospectus from beginning to end before making any financial decisions.

For what it’s worth, even though the IAUI ETF is a new fund, it’s indirectly tied to an ancient asset. Gold has had value for thousands of years, and this year, the gold price has gone on a tear.

Amazingly, the gold price started 2025 at around $2,650 per ounce and recently hit $4,000. That’s a 51% gain, which easily beats the S&P 500 and NASDAQ 100 on a year-to-date basis.

Thus, gold is a hot commodity (literally) this year. However, passive income collectors might not be enamored with physical gold bullion as it doesn’t produce any dividends or distributions.

Another hot topic in 2025 is covered call ETFs, which typically write (sell) covered call options on a tradable asset. The billion-dollar question, then, is whether the NEOS Gold High Income ETF can successfully extract income from gold, or at least from something that behaves like gold.

Indirect Exposure to the Gold Price

Even though the word “gold” is in the name of the NEOS Gold High Income ETF, this fund isn’t guaranteed to follow the gold price. Prospective investors should know that the IAUI ETF carries the risk of deviation from the gold price as well as derivatives-trading risks.

To achieve indirect, approximate exposure to movements of the gold price, the NEOS Gold High Income ETF uses synthetic options-trading strategies. In simplistic terms, this involves buying call options and selling put options on a gold-tracking ETF, the SPDR Gold Trust (NYSEARCA:GLD | GLD Price Prediction).

Frankly, there’s no assurance that the NEOS Gold High Income ETF’s options-trading strategies will achieve similar results to holding gold bullion. This year so far, the IAUI ETF’s share price has gained approximately 8%, which pales in comparison to the 51% ascent of the gold price.

There’s more to this story, though, as the NEOS Gold High Income ETF doesn’t just try to indirectly achieve gold-price participation. It also provides substantial passive income in the form of cash distributions, which you wouldn’t get from owning gold bars and coins.

Big Yield but Limited Gold Exposure

Interestingly, along with the aforementioned synthetic options, the NEOS Gold High Income ETF also holds shares of the Goldman Sachs Physical Gold ETF (BATS:AAAU) as well as U.S. Treasury bonds. 

So, again, this isn’t a “pure gold” ETF by any means. At best, the NEOS Gold High Income ETF will provide limited gold-price exposure; therefore, gold-bullish traders might want to pair IAUI with GLD, AAAU, or physical gold.

On the other hand, the NEOS Gold High Income ETF sells covered calls against its synthetic gold-ETF option positions. This allows IAUI to generate good yield, which should entice passive income hunters.

Impressively, the NEOS Gold High Income ETF advertises an expected annual distribution rate of 12.63%. This should easily cover the fund’s expense ratio (annualized operating expenses) of 0.78%.

Not only that, but the IAUI ETF pays out its distributions on a monthly basis, which enables frequent reinvestment opportunities. The recurring theme here is that you can do things with the NEOS Gold High Income ETF that you can’t easily do with physical gold.

IAUI: A New Covered Call ETF to Consider

To sum it up, the high yield and frequent cash payments make the IAUI ETF worth considering. Plus, it’s more convenient to buy and hold the NEOS Gold High Income ETF than it would be to purchase, store, and insure physical gold bullion.

Just bear in mind that the NEOS Gold High Income ETF doesn’t precisely mimic the profit-and-loss profile of physical gold or of pure-gold funds like GLD and AAAU. That said, this new NEOS gold-income covered call fund is worth a look and just might become the gold standard of high-yield precious-metal funds.