A covered-call ETF, a fund that sells options contracts on its own holdings to generate monthly income while capping how much investors can gain during a rally, just became the target of a $2.25 billion Wall Street deal. Goldman Sachs announced August 12 that it is acquiring NEOS Investments, the firm behind BTCI, a roughly $1.1 billion Bitcoin income fund that Bloomberg senior ETF analyst Eric Balchunas says yields about 27%. The cash-and-equity deal is subject to performance targets and is expected to close in the first quarter of 2027, pending regulatory approval.
NEOS, founded in 2022, manages about $30 billion across 19 options-based income ETFs. BTCI is the fund at the center of the deal. It holds spot Bitcoin ($BTC) exchange-traded products and sells call options against them. A call option is a contract that obligates the seller to give up Bitcoin's upside above a set price in exchange for a premium paid today. That premium becomes the monthly distribution investors receive.
How BTCI generates that 27% yield
The yield number is the one that sells the product. What the fund's performance data actually shows is a different story. BTCI lost about 41.7% over the year ending July 31, with its share price falling from a 52-week high of $65.87 to around $28.40, according to NEOS's own performance data. The fund charges a 0.99% annual fee. NEOS has also noted that some distributions have been classified as a return of investors' own capital rather than investment income. In plain terms, part of that yield figure is the fund returning money you already put in.
Why Goldman bought instead of built
In April, Goldman filed with regulators to launch its own Bitcoin covered-call ETF. That product never launched. Balchunas suggested the NEOS acquisition explains the gap: Goldman chose to buy an established manager rather than build from scratch.
The deal changes Goldman's position in the ETF market materially. Combined with its existing options-based ETF assets and its earlier acquisition of Innovator Capital Management, Goldman would hold more than $130 billion in ETF assets. Goldman said that figure would rank it eighth among active ETF managers globally. The market Goldman is entering has grown to roughly $180 billion, compounding at more than 70% a year since 2021, Goldman said in its announcement, citing Morningstar.