AIPI is the REX AI & Innovation Equity Premium Income ETF, launched June 4, 2024 by REX Shares — the same issuer behind FEPI — and co-managed by Vident Asset Management. AIPI invests in leading artificial intelligence companies drawn from the BITA AI Leaders Select Index and writes out-of-the-money covered call options on those holdings to generate monthly income. With approximately 67 holdings across the AI and innovation sector — including pure-play AI software, infrastructure, and enabler companies like Palantir, CrowdStrike, and Datadog — AIPI offers broader AI sector exposure than a pure FANG or mega-cap tech basket while targeting a monthly distribution rate of approximately 34% annualized. Current grade and live metrics are on our free grading dashboard, updated every market day.

What Is AIPI?

AIPI is an actively managed ETF that invests at least 80% of its net assets in securities comprising the BITA AI Leaders Select Index — a benchmark that identifies companies at the forefront of artificial intelligence development, deployment, and infrastructure across the U.S. equity market. Unlike FEPI's tightly concentrated 15-stock mega-cap basket, AIPI's approximately 67 holdings span a broader range of the AI ecosystem: hyperscaler cloud companies providing AI compute, semiconductor designers enabling AI chips, enterprise software companies deploying AI into business workflows, and pure-play AI software companies like Palantir whose entire revenue model is built around AI-driven analytics and defense applications.

REX Shares and Vident Asset Management co-manage AIPI with the flexibility to adapt holdings and options positioning based on market conditions — the fund is not rigidly passive. On top of the AI stock portfolio, the team writes OTM covered call options on individual holdings to generate the monthly income that funds AIPI's distributions. The OTM strike selection means each holding has upside participation room before the call cap engages, consistent with the income-plus-growth design philosophy REX applies across its covered call ETF family.

The BITA AI Leaders Select Index: What AIPI Holds

The BITA AI Leaders Select Index targets companies that are directly involved in developing, enabling, or deploying artificial intelligence at scale. This is a deliberately broader definition than simply owning the Magnificent Seven technology stocks — it reaches into the second tier of AI companies that have emerged as dominant players in specific AI verticals. Palantir Technologies is a prominent example: a company with no meaningful presence in a standard S&P 500 covered call ETF but a top holding in AIPI given its position as one of the most discussed enterprise AI software companies in the market. CrowdStrike, Datadog, and similar companies round out the AI software and security enabler segment of the portfolio.

This composition gives AIPI meaningfully different performance characteristics from FEPI or a Nasdaq 100 covered call ETF. Many of AIPI's holdings are mid-to-large-cap growth companies with higher individual volatility, higher valuation multiples, and more sensitivity to AI investment sentiment cycles than the mega-cap names. When the market is bullish on AI adoption and these companies are reporting strong earnings growth, AIPI's portfolio can generate significant appreciation alongside the option income. When AI sentiment turns negative or valuations compress, the same companies can experience sharp drawdowns that premium income cannot meaningfully cushion.

OTM Covered Calls on AI Stocks: Why the Premiums Are Rich

AI-focused stocks as a group carry among the highest implied volatility in the equity market — often higher even than the semiconductor sector — because they are pure-play theme stocks whose valuations are tied tightly to sentiment about the AI adoption curve. A company like Palantir might carry 60–80% implied volatility even in relatively stable market conditions, reflecting the binary nature of its revenue growth expectations and its history of violent price moves in both directions around earnings. Writing OTM calls on individual AI company stocks therefore generates substantially more premium per dollar of notional exposure than writing calls on broad indexes or lower-volatility sectors.

The approximately 34% annualized distribution yield reflects this elevated premium environment across the portfolio. Each monthly distribution accumulates the OTM call premiums from all active positions in the AIPI portfolio — a diversified collection of individual AI stock option positions rather than a single index contract. The diversification across approximately 67 holdings means that no single stock's option position dominates the income generation, and the income is somewhat more stable month-to-month than a single-stock covered call fund would be.

AIPI vs Broader AI Exposure

Investors considering AIPI should understand clearly what they are owning relative to other AI exposure vehicles. A broad Nasdaq 100 covered call ETF like QQQI contains many of the same hyperscaler and mega-cap AI names but blended with the full Nasdaq 100 including non-AI technology, consumer discretionary, and other sectors. AIPI is a pure AI and innovation sector bet — its performance is tied to AI sector sentiment, AI company earnings trajectories, and the ongoing institutional investment cycle in AI infrastructure to a degree that diversified index funds are not.

This concentration means AIPI can significantly outperform broad tech covered call funds in strong AI bull markets — as its roughly 35% total return in its first year of operation suggests — and can significantly underperform in AI-specific selloffs where the sentiment driving premium valuations on AI companies reverses. The active management flexibility gives REX and Vident the ability to adjust the portfolio as the AI investment landscape evolves, but it also means outcomes depend on how well those active judgments track the actual winners in a rapidly changing technology category.

Tax Treatment and Expense Ratio

AIPI's distributions are taxed as ordinary income. Covered call premiums collected on individual AI company stocks do not qualify for Section 1256 treatment — which requires broad-based index options — and the underlying AI stock holdings generate little dividend income given the growth-oriented, low-or-no-dividend profile of most AI companies. The result is that essentially all of AIPI's monthly distribution is ordinary income, making the after-tax yield for higher-bracket taxable account investors meaningfully lower than the headline rate. At the 37% federal bracket, AIPI's approximately 34% gross yield nets roughly 21.4% after federal income tax — still substantial, but a significant reduction from the headline figure.

The 0.65% expense ratio matches FEPI and is competitive for an actively managed options-overlay fund with individual-stock call writing across 67 positions. The co-management by REX Shares and Vident Asset Management provides institutional-grade operational oversight that single-manager boutique ETFs may not match. All tax guidance is general; consult a tax professional for your specific situation.

Key Risks

AI sector concentration is the primary risk. AIPI's approximately 67 holdings are all concentrated within the AI and innovation theme, meaning a broad de-rating of AI company valuations — whether from disappointing earnings, slower-than-expected enterprise AI adoption, regulatory action, or simply multiple compression after an extended period of premium pricing — would affect the entire portfolio simultaneously. The option premium income provides a partial cushion against moderate declines but not against a sustained AI sector bear market of the kind experienced in growth stocks generally during 2022.

The fund launched in June 2024 and had less than two years of live performance as of early 2026. While the AI investment cycle has been strongly positive through that period, making AIPI's track record look compelling, the fund has not been tested through a full AI sector correction. The elevated valuation multiples characteristic of many AI pure-play companies — companies priced for years of strong revenue growth — create the potential for sharp repricing if that growth disappoints.

Ordinary income tax treatment on all distributions reduces real after-tax yield for taxable account investors. The non-diversified classification means regulatory concentration limits do not apply. Active management introduces manager risk. And at approximately the asset level typical for newer specialty ETFs, AIPI is smaller than multi-billion index fund alternatives, affecting secondary market liquidity for larger trades.

Who Should Consider AIPI?

AIPI is most compelling for investors with a specific conviction about AI as a multi-year investment theme and who want to generate meaningful monthly income from that AI exposure rather than simply holding AI stocks for price appreciation. The 67-holding breadth relative to a pure FANG basket provides somewhat better diversification within the AI sector, reaching into pure-play AI software and enablers that mega-cap index funds underweight. For investors in tax-advantaged accounts who want AI sector income, AIPI's monthly distributions and OTM strike design make it a well-structured vehicle for that objective.

For investors without a clear AI sector conviction, or for those who view AI stocks primarily through the lens of their current valuation multiples and are uncertain whether those multiples are justified by future earnings, AIPI's concentration in AI-theme stocks deserves the same critical evaluation as any other sector bet. The income overlay is a useful enhancement, but it does not transform what is fundamentally an AI sector equity position into a stable income vehicle. Browse all sector covered call ETFs at our Sector category page, or return to the ETF Fund Directory.

AIPI is a well-designed vehicle for investors who specifically want AI sector equity exposure with a monthly income overlay. The BITA AI Leaders Select Index reaches into pure-play AI companies that broad market covered call ETFs significantly underweight, giving AIPI a differentiated portfolio composition relative to anything else in our tracked universe. REX Shares and Vident's active co-management approach provides institutional-grade execution on an individual-stock OTM options strategy across 67 positions. And the approximately 34% annualized yield reflects the genuine richness of implied volatility across AI company options in the current market environment.

The risks are proportional to the opportunity. AI sector concentration means AIPI's performance is tightly linked to the AI investment thesis — when that thesis is working, AIPI works well; when it faces headwinds, the premium income is insufficient to prevent meaningful drawdowns. The ordinary income tax treatment, limited track record, and elevated valuations of many holdings are all factors that deserve serious weight before sizing a position. Used as a tactical AI sector income allocation within a diversified income portfolio by investors with genuine AI conviction, AIPI delivers what it promises.

Track AIPI's current grade and live metrics on our free dashboard, updated every market day.

⚠️ Tax Note: Tax treatment shown is general guidance only and may vary year to year. Consult a tax professional for your situation.

⚠️ Disclaimer: CoveredCallETFHQ is for informational purposes only and does not constitute financial advice. All data sourced from Yahoo Finance. Grades and scores reflect our proprietary methodology and should not be used as the sole basis for investment decisions. Past performance does not guarantee future results. Always consult a qualified financial advisor before investing.