The JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ) is doing something that should not really work, paying roughly a 10.5% distribution yield while its share price grinds toward record territory in a Nasdaq-100 rally.
If you own JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ) for the fat monthly checks, the real cost hides in the price chart, well past the expense ratio line.
High income and Nasdaq exposure in a single monthly-paying fund sounds like a compelling combination, and for the right retiree in the right context, it can be.
Anyone considering JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ) is usually solving the same problem.
JEPQ markets itself as a premium income machine on the Nasdaq-100. The pitch sells.
At the 24% bracket, a portfolio kicking off $50,000 a year in ordinary-income distributions hands $12,000 to the IRS every April.
Monthly income is having a moment. Retirees and active income investors are pulling cash from money-market funds yielding less than before, and the ETF industry has responded with options-based and high-dividend products that pay every 30 days instead of every 90.
For retirees writing a check to themselves every month, the JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ) is one of the most popular destinations in the ETF universe right now.
JEPQ is an actively-managed ETF focusing on Nasdaq-100 companies. It also invests in ELNs, which function as covered call Nasdaq-100 investments. The ELNs boost the fund's distribution yield to 10.2%, while its equity portfolio could provide some capital gains, albeit somewhat reduced.
The JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) surged to a record high in May as technology stocks soared, and has climbed over 14% from its lowest point this year. The rally has coincided with steady inflows as investors chase its high yield.
If you bought JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ) for the monthly checks, you probably think you own a Nasdaq-100 portfolio with a covered-call overlay.
A 65-year-old single retiree with $300,000 split evenly between two JPMorgan covered-call ETFs can pull roughly $24,000 in annual distributions without filing a single K-1.