CSHI ETF

Fed interest rate cuts continued this month, causing many investors to look to opportunities in longer duration bond strategies. However, Fed Chair Jerome Powell also reinforced the regulatory agency's cautious approach to rate cuts, particularly looking ahead.

CSHI invests in T-bills and S&P 500 option spreads to generate premiums and income. It's strategy results in a 5.9% yield, slightly higher than that of t-bills. Risks are marginally higher too, although there have been no real drawdowns since inception. CSHI is a solid cash ETF, but with cuts looming, investors might consider transitioning away from these in the coming months.

The NEOS Enhanced Income 1-3 Month T-Bill ETF is ideal for longer-term cash positions, offering higher returns with minimal risk. CSHI's strategy involves holding U.S. 1-3 month treasury bills and selling conservative SPX put spreads, yielding 1-1.5% above treasury rates. CSHI is suitable for cash held indefinitely for future opportunities, but may not be ideal for immediate liquidity needs or during rate cuts.

One of the most mentioned statistics in financial markets this year is that there's over $6 trillion in cash sitting in money market accounts. That figure steadily increased over the course of 2024.

As tax season draws nearer, advisors and investors increasingly look to their portfolio to optimize taxation. Given the surge of flows into short-term investments in the last year and a half, understanding the tax implications of these various assets may allow for better portfolio optimization and opportunity.

CSHI has outperformed T-bills and HYSAs by over 1.3% higher returns through integrating a strategic put spread options strategy. While CSHI's yield is taxed as ordinary income rates, its effective return still outperforms BOXX and HYSAs after taxes. CSHI provides consistent monthly income distributions and better liquidity over BOXX, making it a more attractive short-term cash management solution despite potential rate cuts affecting future yields.

In a year of volatility and risk, cash alternatives continue to prove a notable choice by investors. The NEOS Enhanced Income 1-3 Month T-Bill ETF (CSHI) recently crossed $500 million in AUM this week with distribution yields above 5.5%.

Given the close attention to the U.S. Federal Reserve's actions by the capital markets, it is important to remain adaptable in the current climate. Therefore, it may be beneficial to explore an active fund choice such as the NEOS Enhanced Income 1-3 Month T-Bill ETF (CSHI).

Investors are still turning to ultra-short and short-duration bonds this year due to uncertainty around interest rates. Federal Reserve Chair Jerome Powell's recent remarks following the May FOMC meeting suggest that investors should prepare for the possibility of higher rates for an extended period.