Money market funds have been the default parking spot for cash since 2022, and for good reason. They kept pace with the Fed, paid meaningful interest for the first time in a decade, and let investors sleep at night. But the arithmetic has shifted. With top money market accounts now paying roughly 3.8% and May CPI printing at 4.2%, a money market fund is quietly losing purchasing power every month it sits untouched. Enter the NEOS Enhanced Income 1-3 Month T-Bill ETF (NYSEARCA:CSHI), an actively managed fund that holds short Treasury bills and layers an options overlay on top, targeting a yield closer to 5% while paying monthly.
Why Money Market Funds Are Falling Behind
The appeal of a money market fund is simple: daily liquidity, penny-stable NAV, and a yield that tracks short Treasury rates. That formula works when the Fed is hiking or holding above inflation, and today that condition no longer holds. The federal funds upper bound has sat at 3.75% since December 10, 2025, a pause now running roughly eight months. Meanwhile, the 4-week T-bill yields 3.69% and the 13-week yields 3.84%. Any money market fund is capped by those numbers, minus fees.
Below inflation, that gap compounds. On a $100,000 balance, the difference between 3.8% and 4.2% is roughly $400 in lost real purchasing power per year, assuming the money market fund maintains its yield. If the Fed’s next move is a cut, yields fall first. If the next move is a hike, as the June dot plot hinted, money markets will chase the move rather than lead it.
What CSHI Actually Does
A portfolio of 1 to 3-month U.S. Treasury bills forms the core of CSHI, the same collateral base you would find in a Treasury money market fund. On top of that, the manager sells cash-secured SPX put spreads, which are defined-risk options positions that generate premium income regardless of whether the S&P 500 rises or falls, as long as the index does not drop sharply through the short strike. That premium gets added to the T-bill yield and distributed monthly. The end result is a fund that carries a T-bill-like risk profile in most market environments, yet delivers a yield that sits materially above what pure T-bills offer.
CSHI has paid seven straight monthly distributions in 2026, most recently $0.1945 per share on July 17. The trailing 12-month distribution total is $2.407453, and the total return over the last year is 5.04%. That figure sits above the 4.2% inflation print and roughly 120 basis points above a top-tier money market fund. On a $100,000 balance, that spread is worth about $1,200 a year before taxes.
The Cost and the Catch
At 0.38%, the expense ratio on CSHI eats into returns more than that of a money market fund charging 0.10% to 0.15%. That extra fee is already baked into the 5.04% total return figure, so the comparison still holds up. Assets under management stand at $1.54 billion, which is large enough for the shares to trade tightly, and over the past year, the stock has moved within a narrow band from $49.55 to $49.93.
The tradeoff sits in the options overlay. CSHI can lose principal in a fast equity sell-off, where put spreads move against the fund faster than T-bill income can absorb, a risk that a pure money market fund does not carry in any normal environment. Historically, Hori’s drawdowns have been shallow and short, but they are not zero. Investors treating this as identical to cash are misreading the structure.
Making the Swap Without Getting Careless
The cleanest use case is the cash allocation an investor does not expect to touch for at least six months. Emergency funds and next-quarter tuition still belong in a money market fund or high-yield savings. Longer-dated cash, the kind currently earning 1.68% in a national-average CD or 3.8% in a money market, is where the yield spread is most visible. Distributions are taxed as ordinary income, which makes the tax profile most favorable inside an IRA or Roth.
What to Watch From Here
The case for CSHI weakens quickly if the Fed hikes aggressively and short T-bill yields climb back above 4.5%, closing the gap between money markets and enhanced-income funds. It weakens differently if equity volatility spikes and the options overlay pressures NAV. For now, with rates frozen at 3.75% and inflation running above money market yields, the enhanced payer is doing the job cash used to do.
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