The largest sector option-income fund's distribution was not its return
NEOS estimated that 63% of the latest distribution was return of capital, and State Street's energy fund trailed its sector by 8.4 percentage points.
Key takeaways
NEOS Real Estate High Income ETF, IYRI, the largest sector option-income fund, returned −0.11% for the year ended Sept. 30, 2026, including its monthly payments. As of that day, its 12-month trailing distribution rate was 11.47%.
The fund held $301 million as of Oct. 16, 2026, 31% of the $967 million in the category's 22 funds.
IYRI holds $301 million, most in the category
It owns U.S. real estate companies and sells call options on funds that track the Dow Jones U.S. Real Estate Capped Index, collecting a premium and giving up gains above a set price. It launched in January 2025.
Most of the latest distribution was return of capital
NEOS calculates the 11.47% by adding the past 12 distributions, including return of capital, and dividing by the latest ex-date net asset value. The change in the share price is not in that figure.
The 30-day SEC yield, as of Sept. 30, was 3.31%. On its fact sheet, NEOS defines that as the Securities and Exchange Commission's measure of income from the holdings over 30 days, based on the dividends those holdings are expected to pay.
On that fact sheet, NEOS says the figure can differ, at times significantly, from the cash the fund pays. In its Sept. 30 distribution announcement, the firm said the yield does not include income from selling options.
NEOS estimated that 63% of the latest distribution was a return of capital. The firm says the payments may include option premiums, dividends, capital gains and interest. In that distribution announcement, NEOS said a return of capital is treated for tax purposes as a return of the investment and reduces the holder's cost basis.
For the year ended Sept. 30, the Dow Jones U.S. Real Estate Capped Index returned 0.68%, against the fund's net asset value return of −0.11%. The fund finished less than a percentage point behind a sector that barely rose. There was no rally to sell.
The energy fund trailed its sector's rally
West Texas Intermediate crude averaged $60.04 a barrel in January 2026 and $97.31 in September, the U.S. Energy Information Administration reported, a rise of 62%.
State Street Energy Select Sector SPDR Premium Income ETF, XLEI, launched on July 29, 2025. It holds an energy-sector ETF and sells call options on it.
For the year ended Sept. 30, State Street reported a net asset value return of 33.2%, against 41.6% for the Energy Select Sector Index. The S&P 500 returned 15.7%. The fund beat the broad market and finished 8.4 percentage points behind that sector.
Real estate, where 31% of the money sits, barely moved, and NEOS estimated that most of the latest distribution was return of capital. Energy was the sector that rallied, and State Street's fund trailed it.
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Frequently asked questions
What did NEOS Real Estate High Income ETF return for the year?
It returned −0.11% for the year ended Sept. 30, 2026, including its monthly payments.
What was its trailing distribution rate?
As of Sept. 30, 2026, its 12-month trailing distribution rate was 11.47%.
How much of the latest distribution was return of capital?
NEOS estimated that 63% of the latest distribution was a return of capital.
What does NEOS say a return of capital does to a holder's cost basis?
NEOS said a return of capital is treated for tax purposes as a return of the investment and reduces the holder's cost basis.
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