4 min readBy Ron Koren ETF Insider
How does the BNDI ETF work?
The BNDI ETF is a specialized investment fund that focuses on a specific sector. This exchange-traded fund offers investors exposure to a range of companies in this sector.
The Neos Funds' BNDI issuer, an actively-managed ETF, predominantly invests in a diversified portfolio of bonds and exchange-traded funds (ETFs) primarily focused on bonds, aiming to maintain at least 80% of its assets in such investments. Additionally, the fund employs a strategy involving the sale and purchase of S&P 500® Index put options to augment income beyond what is derived from its core holdings. Managed by NEOS Investment Management, LLC, the fund utilizes a put spread strategy with SPX put options, aiming for high monthly income in a tax-efficient manner. These options, designed for European or cash settlement, seek positive returns even in modestly declining equity markets, provided the net premium collected exceeds the net cost. The fund's portfolio duration typically ranges from 6 to 9 years, reflecting its sensitivity to interest rate changes. While primarily focusing on investment-grade debt securities, it may allocate up to 30% of its assets to high-yield securities. Furthermore, the fund may engage in active and frequent trading to implement its investment strategies effectively.
BNDI Dividend, a component of the Neos Funds, operates as an exchange-traded fund (ETF) designed to provide investors with exposure to a diversified portfolio of bonds and bond-related instruments while also incorporating a strategy involving the sale and purchase of S&P 500® Index put options. This ETF aims to generate income for its investors through both the dividends accrued from its bond holdings and the premiums earned from its options trading activities. Managed by NEOS Investment Management, LLC, BNDI Dividend seeks to achieve its investment objective by maintaining at least 80% of its assets in bonds or ETFs primarily invested in bonds, complemented by strategic options trading. This approach is intended to offer investors the potential for enhanced returns beyond traditional fixed-income strategies by capitalizing on opportunities in both the bond and options markets.
BNDI Tracking, a constituent of the Neos Funds, functions as an exchange-traded fund (ETF) designed to closely track the performance of a specified benchmark, namely the US Aggregate Bond market index. Through its investment strategy, BNDI Tracking aims to replicate the returns of this index by investing at least 80% of its assets in bonds or ETFs primarily focused on bonds, as well as utilizing derivatives such as forwards, options, and futures contracts related to bonds. Managed by NEOS Investment Management, LLC, this ETF seeks to provide investors with a cost-effective and efficient means of gaining exposure to the broad fixed-income market, enabling them to achieve investment results that closely mirror the performance of the designated benchmark. By maintaining a high correlation with the US Aggregate Bond market index, BNDI Tracking endeavors to deliver consistent and predictable returns reflective of the broader bond market trends, making it an attractive option for investors seeking passive fixed-income exposure.
BNDI Correlation, an integral component of the Neos Funds, operates as an exchange-traded fund (ETF) designed to maintain a high correlation with a specific market index, typically the US Aggregate Bond market index. Through its investment strategy, BNDI Correlation aims to closely replicate the performance of this benchmark by investing at least 80% of its assets in bonds or ETFs primarily focused on bonds, alongside employing derivatives such as forwards, options, and futures contracts related to bonds. Managed by NEOS Investment Management, LLC, this ETF provides investors with a means to achieve investment results that closely mirror the movements of the designated index, thereby enabling them to capitalize on the prevailing trends within the broader fixed-income market. By prioritizing correlation with the target index, BNDI Correlation offers investors a reliable tool for tracking the performance of the bond market, facilitating effective portfolio diversification and risk management strategies.
BNDI Sector, an essential component within the Neos Funds, functions as an exchange-traded fund (ETF) tailored to provide investors with exposure to specific sectors within the bond market. Employing a strategic investment approach, BNDI Sector aims to focus its assets on bonds or ETFs primarily concentrated in targeted sectors, such as government-related bonds, corporate bonds, mortgage-backed securities (MBS), or other specialized sectors within the fixed-income universe. Managed by NEOS Investment Management, LLC, this ETF offers investors the opportunity to tailor their bond exposure to specific sectors they deem attractive or strategically advantageous within the broader fixed-income landscape. By concentrating on particular sectors, BNDI Sector aims to capitalize on sector-specific trends and opportunities, providing investors with a targeted approach to fixed-income investing that aligns with their investment objectives and preferences.
BNDI Exposure, a vital component within the Neos Funds, serves as an exchange-traded fund (ETF) designed to offer investors diversified exposure to various segments of the bond market. Employing a comprehensive investment strategy, BNDI Exposure aims to allocate its assets across a broad spectrum of bonds and bond-related instruments, including government bonds, corporate bonds, mortgage-backed securities (MBS), and other fixed-income securities. Managed by NEOS Investment Management, LLC, this ETF provides investors with a well-rounded exposure to the bond market, enabling them to capture the potential returns and benefits associated with different sectors and maturities within the fixed-income universe. By diversifying across multiple segments of the bond market, BNDI Exposure seeks to mitigate risk while maximizing opportunities for income and capital appreciation, making it an attractive option for investors seeking broad exposure to the bond market within a single investment vehicle.
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