92: How to Unlock Bitcoin's 27% "Dividend Yield"

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0:57Hey everyone and welcome back to the Rich Habits Podcast, a top five business podcast on Spotify. My name is Austin Hankwitz and I'm joined by my co-host Robert Croak. Robert is a seasoned entrepreneur in his 50s with lifetime revenues of over 300 million under his belt and I'm an entrepreneur in my late 20s with a background in finance and economics. Since quitting my full-time job in corporate finance a few years ago, I've built a seven-figure media business and actively advise some of the most well-known fintech companies around the world. As the show name might suggest, every episode we talk about rich habits as they relate to business, finance, and mindset.

1:34However, we try and bring you two unique perspectives, one from an industry veteran, which is Robert, and the other myself, someone who's still in the process of building wealth and figuring it all out. So Robert, what are we going to be talking about in today's episode? Yes, in this week's episode of the rich habits podcast we're thrilled to welcome troy and garrett the managing partners of neos investments not only has neos been a long time supporter of the show but they also make some of the most exciting income focused etfs in the industry and as bitcoin hits all-time highs we're really really excited to discuss their newest etf the neos bitcoin high income etf btci It's great to have you both back on the show, and I'm so excited to dig into this one.

2:19Thanks for having us, Robert. Robert, I'm also really, really excited for this conversation. I've been very public about how much money I have invested into NEOS ETFs. For those of you who are unaware, I've got over$120 ,000 of my hard-earned money invested into SPYI and QQQI. Before we narrow the focus down to BTCI, how about we get some intros from Troy and Garrett. Let's start off with what does NEO stand for, as well as maybe a quick rundown of the different ETFs that you guys have in your suite of ETFs. And especially let's talk about their tax efficiency, how the yield is generated, and why it's important to have some of these funds in a well-diversified portfolio like myself.

2:57Sure. So I can start a little bit about NEO's investments. We are a global asset manager, and we focus on quantitative methodologies to creating yield-enhanced or risk-mitigated investment solutions. So think about your core building blocks that build your portfolio, equities, fixed income, different alternatives. We want to take those types of product allocations that you have today and overlay ways to generate a much higher degree of tax-efficient monthly income and lowering some of the volatility and risk associated by letting you, the investor, choose the types of exposures or areas that you want to expose your investment views on or that meet with your own financial goals.

3:35Neos today has a lineup of actually eight products. Of course, we're excited to talk about the most recent one, which is our Bitcoin product, BTCI, in a few minutes. But some other products that we brought out in the earlier days that some of today's audience might know or others in our SPYI, it's our S &P 500 high income ETF. QQQI is our NASDAQ 100 high income. IWMI is our Russell 2000 high income. And then on the fixed income side, we actually have some things for the lower risk allocations into your portfolio, which would be CSHI. It's a one to three month treasury bill product. We have BNDI, a core fixed income, where we're adding additional income on top of your core fixed income exposure.

4:17We also have HYBI, which is a actively managed high yield strategy with a enhanced income overlay to it. And so when we think about our overall product sets, we want to fit within your equities, your fixed income, your alternatives, and allowing you, the investor, to expose your views on the asset allocations you're looking for or the income amount you're looking to receive. So in simple terms, it sounds like you guys create ETFs across the gambit between the S &P 500, the NASDAQ, some Bitcoin, some bonds, like all across, right? How do you build a well-diversified portfolio? You've got diversification inside of it.

4:56And then you guys offer ETFs that align with that diversification, but you sprinkle on some tax efficient income on top of it. That's right. That's awesome. Now I'm definitely, you know, participating in the upside of holding SPYI myself getting paid out about$1 ,200 a month just by holding it, which is really consistent and really tax efficient. So it's exciting to see that complement the rest of my portfolio. So let's now talk about cryptocurrency, right? What is the new NEOS Bitcoin high income ETF, BTCI? What does it yield and why are people buying it? So I think for us, when we wanted to, we really, as Gaurav was kind of alluding to, we look at ourselves as a solutions provider.

5:34So as you just discussed, we have all these different ETFs that kind of go from equities to fixed income to ultra short duration and now alternatives with our Bitcoin high income ETF. We really wanted to have something in the space specifically around Bitcoin where we could provide income through an option strategy while holding some underlying long Bitcoin exposures, whether that's through one of the ETPs that are out there or synthetically through an option strategy. And we look at it as if you could hold some Bitcoin, and there are times when Bitcoin kind of just trades sideways and it doesn't do much, and if you could still earn some income during those times, we're looking to provide that income.

6:09And then when it does move higher, like it did over the past couple of weeks after the election, we really want to be able to participate with that upside. While you are selling calls deep out of the money and bringing in income to distribute, you will eventually cap out part of your portfolio. But the nice part about our rules-based strategy is we're not overlaying on 100 % of the portfolio. So a lot of the portfolio can still participate with the upside of Bitcoin while still providing that real income on a monthly basis. We just had a distribution. The fund went X today. It distributed just over 2.3%.

6:38So figure an annualized yield of over 27%. Wow, 27%. I mean, and to that point too, to the upside participation, I just pulled up BTCI right now on my computer. The price of BTCI, which is again that upside participation, went up 23 % over the last month. So not only can investors expect that, let's call it 27 % distribution yield on an annualized basis, but you also experience the ups and downs that come with holding Bitcoin. Exactly. Yes. We wanted to make sure that while you're holding it, while you're holding our product, you're getting that income on a monthly basis, that when we do have these runs higher, specifically around events like we just had, we want to make sure that you can participate and that you're not just really capped out close to where you brought the income in.

7:20So for us, having that price appreciation is really important. And as you said, you know, it's had a nice run over the past few weeks. And that's how we kind of managed the portfolio to, you know, ensure that it could participate with the ups and downs of Bitcoin while still providing that income. That's amazing. Yeah. And so everyone knows I've been in crypto for many, many years. And recently I shared some crazy screenshots to the Rich Abbott's network and they really were losing their minds seeing me, you know, buying Ethereum and Bitcoin for, you know, I showed some screenshots of me buying 100 Ethereum at$17 each and buying 10 Bitcoin at$2 ,600 each and stuff like that.

7:58So personally, it's been incredible to see the institutional adoption of Bitcoin and cryptocurrencies as a whole. So what are your thoughts on Wall Street's relationship with Bitcoin, how far it's come, and how much of an impact on your confidence it made in creating a BTCI, the ETF? As probably most listeners of Wall Street's always looking for the next opportunity to provide some type of investment product or ability for individuals to make money off of different asset classes. And so I think the biggest issue was just the regulatory hurdles to get through to one, institutionalize the security aspect and the structure behind it to be able to create a financial product.

8:39And once the SEC, the regulators got comfortable with how they could ultimately safeguard investor assets within crypto, then you saw obviously the opening and the adoption for ETFs and different financial products to be available to the masses and to the retail. And so I think overall, it took a while to get there, but we really got off the cliff earlier this year with the approval of all the spot Bitcoin ETPs. Now you've seen Ethereum. And so I think that's opened up the ability for these financial products to have options and different derivatives on them, which allow us to create the products that we like to.

9:15I think that's only going to continue. And so as we see, certainly new president elect and an administration that's very much more pro supportive on digital assets and crypto and taking down some of the red tape or hurdles for investors to be able to access these types of products. I think that's only going to continue and how deep it goes on different coins and digital assets, not sure, but certainly getting kind of these core, more institutionalized cryptocurrencies to be out into the masses and allowing asset managers such as ourselves to overlay our expertise as different products for them to choose from?

9:51I think we only see that growing given the structural shift and obviously the new president-elect and what's being voiced so far on regulatory changes. Yeah, I agree. And I think it's so important when you think when BlackRock says the water is safe, then I think the water's pretty safe. And so moving forward, we just have so much adoption and all the big boys are jumping in, including you guys. It shows us that we have a path finally and we have a place to go and that this is going to work. Now, are there going to be bad actors? Yes. Are some cryptos going to go to zero? Yes. But that's in any growing sector.

10:26So I'm super excited about it for sure. And I think, you know, beyond that too, Robert, what's so exciting is we've been so vocal about how important it is to have five to 15 % of your total portfolio allocated to Bitcoin. And we've been so vocal for the last two years about that, right? How important it is to be dollar cost averaging into this asset class because over a long period of time tends to outperform the S &P 500. Now let's dig into the people that maybe just want to own Bitcoin, right? There are people out there that want to own Bitcoin directly. They want to have their cold wallets.

10:56They want to be sort of these Bitcoin maximalists and maybe aren't interested in the ETFs. So what type of investors are you hoping are interested that do resonate with BTCI? Is it the investor that wants the income? Are they thinking more about the stability of the returns, right? Who is that like perfect investor for BTCI. Now, before you answer that question, let's take a moment to hear from this episode's sponsor, Monarch Money. This episode of the Rich Habits Podcast is brought to you by Monarch Money, which, by the way, received the award for best budgeting app of 2024 by the Wall Street Journal.

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12:07Monarch is the top-rated all-in-one personal finance app for a reason. That's because Monarch helps you make smart money moves very simply. After trying out Monarch for myself, I get why it's the top-rated personal finance app. And right now, listeners of this show will get 30 % off their first year when you go to monarchmoney.com slash habits. That's M-O-N-A-R-C-H-M-O-N-E-Y.com slash habits to get 30 % off your first year. And we appreciate them supporting the show and all of our listeners. All right, let's now see what they have to say. I think it's anyone looking for exposure to the space. Maybe they don't want to have that cold wallet.

12:50They're not ready to kind of take that leap into owning Bitcoin directly, but they want to get some income while they're holding the product. So it's really coming down to someone looking to be in the space, maybe wants a little bit less of a volatile ride with the options. You could probably dampen the volatility of the product versus the underlying Bitcoin a little. So I think it's someone really looking for the income, but wants to be maybe dabble, start to own in the space and see how it works out for them. I think it makes a lot of sense, right? As someone who owns SPYI and so much of it, what's really cool about that is, do I have hundreds of thousands of dollars invested into the S &P 500 via VOO?

13:29Yes, I do, right? So like, give me the volatility that comes with that. But I think that's what's so fun about building a well diversified portfolio from scratch, something that Robert and I really, you know, talk about, which is like active management of our portfolios. I'm able to allocate 10, 15 % of my portfolio into this more stable income-focused tax-efficient ETF that is SPYI, as well as BTCI, and sort of have that strategy laid out for me that says, okay, I know that every $100 invested here can turn into X amount of income, so how do I now allocate this additional income? Do I want to go buy more of the existing ETF?

14:03Do I want to use it as an income stream to supplement my lifestyle? Do I want to use it as a way to maybe dabble in the dark arts of single stock investing or anything else that's out there? So there's a lot of really fun ways that people can build these portfolios. And I think BTCI does a really good job of really rounding out the edges of having some crypto exposure with some tax efficient high income on a monthly basis. And I'd like to touch next on there's a lot of confusion for Bitcoin, you know, because people always see that it moves in cycles. You know, we see the big bull runs. We see the big retracements and pullbacks.

14:36And in my opinion, I feel we're going to see less and less of that as more and more of the big firms get involved and all these ETFs are created. So do you think with the emergence of all these crypto ETFs that that will cool off the volatility and the retracements in the coming years? Because I feel like this is kind of our last super cycle. and then it's just going to become more stable over time. We'll still see volatility, but just not as much. What are your thoughts on that? Yeah, I would agree with you, Robert. I think if you think about any asset class or anything new, when there's only a smaller subset of investors that are in it, you can definitely see much larger price fluctuations.

15:16I do agree. I think as it's become more institutionalized and you have more financial products and more investors as a whole within the space, when you start to get one of those retracements or those sell-offs, there's a lot more people that want to take advantage and buy that dip or that sell-off. So just naturally, as you have more buyers and more investors in the market, I think that will help substantially, obviously a slightly lower volatility because you're gonna get people that wanna be buying the dips, buying those types of sell-offs. That's overall healthy, right? That's actually a good thing, generally speaking.

15:47Bitcoin's volatility is actually so high, even still today, relative to the S &P 500, just to give like the audience idea, all these have volatility indexes. And if you just think about the number, the S &P's volatility index is roughly 17 today, right? That's including all sorts of conversations around the Fed and interest rates and new presidential elections and stuff. So you're seeing that S &P volatility at 17. Bitcoin is 60, right? Oh, wow. So you still have a volatility index of, on average, 60. It's not 80, maybe where it was three years ago in Bitcoin, but 60 is still exponentially higher than what you're seeing in just broad-based equity markets.

16:30So I think overall, the institutionalization, the more buyers coming in, more financial products to be able to support that, totally agree, will reduce some of the volatility. But I think you're left with good volatility, as opposed to maybe some bad volatility of things that I would say are just much more sporadic because it was a more emerging asset class and something that not all people would have access to. because to your earlier question, people that do the research and the work, getting Coinbase set up or cold wallets and understand where my money is and am I comfortable? It's going to be safe.

17:00Now that they can buy it in their Schwab, Robinhood, you know, public.com, right accounts, that's just giving the ability for a much more wider audience and comfortability. Yeah, I agree. And either way, I guess, what's your opinion on how does that lead to the great value proposition for BTCI? The fact that you can keep getting the steady income even though Bitcoin frequently fluctuates. Talk to the audience about that because I want to make sure they hear this because many of them are still saying they're too late on crypto or they just simply don't understand the upside potential of crypto and Bitcoin specifically long-term.

17:38And I think BTCI really solves this problem because you're going to have that income regardless of the fluctuation. So walk them through that a little bit. Yeah, I agree with you. I think to people listening who say I'm too late to buying any kind of Bitcoin, it's had its move, I don't know if it'll continue. I think the nice part about BTCI is while it's sitting here, you can still earn income on a monthly basis off of the volatility of Bitcoin that Garrett just walked through. So for those times when we do have those big rallies and we do see Bitcoin eventually move higher again, you can participate in a lot of that upside, the way the structure of this rules-based strategy works.

18:17But in the meantime, you could still bring in income and have a nice income stream off of your investment into BTCI. So really to us, as you know, all of our strategies here are income producing. We focus on the active option management of all of our products. And what it comes down to is really sourcing that income from the different volatility markets, as Garrett was walking through, whether it's the S &P 500 with SPYI or the NASDAQ 100 with QQQI, for Bitcoin having so much more volatility embedded into it, you could bring in a lot of income, hence the higher yield that you're seeing on a product like this.

18:52Something that I think is really interesting about this is, and Robert, you probably can resonate with this. I certainly can. When I was dollar cost averaging into Bitcoin aggressively, right, call it tens of thousands of dollars in 2023, you know, I've since invested well over 100 ,000 into Bitcoin over the last 18 to 24 months. But to, you know, this point of dollar cost averaging, it really sucks when the price doesn't do anything, but you continually put more money into it, right? It's like, what am I doing this for? Because with some single stocks or even ETFs, like they can stay the exact same, but they pay their investors dividends quarterly, right?

19:29So like, I do see a return on my investment, even if the stock stays the same. But with Bitcoin, I mean, I'm over here buying at like 24 ,000, 25 ,000. It's just been there for months and months. I'm like, man, when is this actually going to work, right? When's this going to pay off? I think that's what's so exciting about BTCI is like for those investors that get frustrated when it comes to dollar cost averaging and not seeing results in a one, two, three, four, sometimes five month period in time that comes with, you know, long-term holding of certain asset classes, having that monthly income to look back at and say, wow, I just got paid $3 ,000 this month because I own so much BTCI or wow, I just got paid$47 because of my BTCI position, right?

20:07Whatever that looks like for you as an investor. I think that is just what really helps round some of the edges when it comes to getting frustrated with investing and not having to wait for that perfect moment and listen to like, well, Robert Nelson keeps saying it's going to go up, but it hasn't done nothing yet, man. I'm just, I don't know what to do, right? I think it's kind of this perfect balance for those investors that do want to see some immediate returns, immediate results with their investment, as well as again, to Troy and Garrett's point of that awesome upside potential, because they do have such long exposure to the asset class.

20:36Yeah, but I think that speaks to patience is the key in investing. The people that try to get rich quick are the ones that try to time the market. They're always in and out. They're chasing, chasing, chasing, and their returns never, ever beat the market and certainly don't keep up with what we teach. And so I think it really, what was F. Scott Fitzgerald's famous quote, the victor goes to from the spoils. And I think that's a perfect situation here. And that's why we love what you guys are doing is because I believe we are opening people's eyes up to, you know, these new opportunities to beat benchmarks, have income from your ETFs and be able to make money two ways.

21:19And I just think that's what makes it so awesome that we get to share with our audience all of these incredible products that you guys are producing, you know, for the last few years. And it's just an exciting time because I feel like it's, we're always just releasing the cheat code to them of, look, if you want to get wealthy, here's the way to do it. Here's the way to make more money. And it's a lot better than a mutual fund or a target date fund or a CD. I'm right there with you, Robert. So, you know, as we kind of wrap things up here, I'm curious, is there anything you want to say directly to your fellow, you know, So NEOS ETF investors, right?

21:51You all have billions of assets under management. I'm sure millions of that is coming from people who listen to the Rich Habits podcast. So one, that. And then two, what does 2025 look like for NEOS? Is it new ETFs? Is it new asset classes? Like, what are you all focused on? Yeah, first and foremost, thank you, right? Thank you for your trust, your partnership. It means a lot to us. Troy and I have spent our whole careers focusing on this space. And this is what we're incredibly passionate about. Our whole team of roughly 20 people here are passionate about delivering these great yield enhancing products and delivering the performance to all.

22:21So we just appreciate your commitment, the trust to it. You will always know that we're always here. Our heads are down. We're focused exclusively on this space because we love it so much. We put a tremendous amount of our own capital and our friends and our family in it. So thank you for your trust and commitment. And I'll let Troy talk a little bit about 2025 for us. Sure. No, thank you. Thank you both. And thank you to the community. I think for 2025, as Garrett said earlier, we have eight ETFs in the marketplace now. We're really excited about those. We have two more in registration right now, which are filed out there.

22:52One is a 20 plus year ETF with added income. Think of it as a CSHI, but with 20 year longer duration. And then we have a real estate high income ETF that's filed out there right now. So we're hoping to get those out in the next couple of months. And then after that, we're looking into, yes, we're going to continue to expand. As we talked about earlier, we're a solutions provider. So we're not looking to bring out a ton of ETFs all at once. We We thoughtfully bring out our products when there's a demand and a need, and we feel like it could fit into our overall lineup, but you could rest assured they will all have options income and be monthly distribution products.

23:28So we're really looking forward to finishing off a great year of 24 and really looking forward to what we're going to be bringing out in 25. That's amazing. Troy, Garrett, thank you so much for joining us on this week's episode of the Rich Habits Podcast. I am so excited for BTCI. I cannot wait to own more of it. I love the monthly distribution. The 27 % tax efficient annual yield there is insane. Cheers to all the success you all have seen. I know you introduced QQQI earlier this year, and I think it's well over half a billion dollars in assets under management already. SPYI is over 2 billion in assets under management.

24:01You guys are just a rocket ship, and it's so cool to be a part of your journey. Thank you, Robert Austin and the audience. We appreciate the opportunity to come on today, and thanks for everything. Thank you. Robert, that was an awesome conversation with Troy and Garrett. I love that they are so open to joining us here on this podcast. I think a quick takeaway that I got was kind of back to this idea of Wall Street being so thumbs up on these Bitcoin ETFs and, you know, being so passionate and excited about introducing this new asset class to the masses, right? BTCI is a great example of that.