The J.P. Morgan Nasdaq Equity Premium Income ETF has performed well but has underperformed the market since my initial hold rating last year. My hold rating was justified due to the ETF's consistent performance, despite its underperformance relative to the broader market. The fund's strategy and investment thesis focus on generating income through equity premiums, which has shown stability but not market-beating returns.
The JPMorgan Nasdaq Equity Premium Income ETF offers a 10% dividend yield, combining tech exposure with income generation through selling covered calls. Tech giants like Apple and Microsoft provide low dividends, making JEPQ attractive for income investors seeking tech exposure without relying solely on stock appreciation. The Fund's strategy caps upside potential, making it less suitable for strong bull markets but advantageous in sideways or choppy markets.
The iShares Preferred and Income Securities ETF uses a portfolio of "preferred stocks" to generate steady income. The JPMorgan Nasdaq Equity Premium Income ETF uses options strategies to create an income stream.
At first glance, JEPQ offers investors the 'perfect' investment vehicle - Nasdaq 100 exposure with a much higher yield than the index. However, whether you're buying JEPQ for income OR total returns, it appears as though there are much better options available. The fund is more well-constructed than other covered call funds, which is something.
JEPQ ETF survived recent volatility event with only a small drawdown, proving its resilience. Investors should be cautious of high-valuation growth stocks like NVDA and Microsoft held in JEPQ ETF. There are growing concerns about the sustainability of the AI investment theme, as the return on investment in AI appears low.
JPMorgan Nasdaq Equity Premium Income ETF's price has fallen over 5% since May, presenting a buying opportunity for income-focused investors. JEPQ offers a dividend yield of 9.7% with monthly distributions, making it suitable for retired investors supplementing income or younger investors implementing a dividend wheel strategy. JEPQ's option strategy, focused on out-of-the-money calls, allows for capturing higher market upside while generating income, primarily from tech sector exposure.
Historical data shows that JEPQ has demonstrated lower drawdowns compared to the broader market during market downturns. I don't consider such past performance as a coincidence. The use of options and the underlying screening method are structurally sound approaches, in my view.
JEPQ benefits from higher implied volatility, generating more income from selling options. Assets under management for JEPQ continue to rise, despite a decline in net asset value. JEPQ's yield may rise above 10% with current volatility levels, making it an attractive option for income-seeking investors.
JPMorgan Equity Premium Income ETF, JEPI, is a beloved high-yield monthly dividend ETF, and JPMorgan has an even higher-yielding version called JPMorgan Nasdaq Equity Premium Income ETF, JEPQ. JEPQ uses the Nasdaq as its base, offering higher income but more volatility than JEPI. JEPQ is designed for maximum income with similar volatility as the S&P, but investors need to be aware of potential downsides and tax implications.
Investors are still seeking equity exposure for income even as interest rates rise, turn to ETFs like JEPQ and GPIQ. JEPQ uses ELNs for income, while GPIQ writes call options, providing higher yield and a more understood strategy. GPIQ edges out JEPQ in income generation, but both ETFs lag behind benchmark QQQ in performance.
JPMorgan Nasdaq Equity Premium Income ETF has gained popularity for generating capital appreciation and significant monthly income. JEPQ has outperformed other income-focused ETFs in terms of appreciation and yield over the past year. JEPQ is a quintessential hybrid ETF for investors seeking recurring income without sacrificing appreciation, especially in the technology sector.
JPMorgan Nasdaq Equity Premium Income ETF and Global X NASDAQ 100 Covered Call ETF offer high-income yields from mega-cap tech stocks, providing diversification into the AI boom without sacrificing income. Both ETFs employ covered call strategies on the NASDAQ 100 index. We compare them side by side and explain why only one is worth buying.