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JPMorgan Nasdaq Equity Premium Income ETF

JEPQ is an actively-managed fund of US large-cap companies from the Nasdaq-100 Index, assessed and managed using ESG factors and a proprietary data science driven investment approach. The fund also invests in ELNs in seeking income generation.

Historically, we've expressed disdain for option-enabled, high-income funds that use covered calls and derivative strategies to generate yield. Funds that sell covered calls on their holdings can experience realized losses if options expire in the money, leading to a slow decline in fund assets over time. Today, we're analyzing JEPQ, a relatively new ETF from JPMorgan that follows a similar strategy to JEPI but on a more volatile underlying index - the Nasdaq 100.

JEPQ: 2 Key Reasons To Avoid This ETF For Now

I project a bullish outlook for JEPQ in 2024, due to improving macro setting and supportive AI adoption. Anticipated rate cuts and a weaker dollar are expected to benefit growth assets like Nasdaq 100 and JEPQ constituents. JEPQ's call overwrite strategy provides income generation and downside protection in high-risk environments.

JEPQ: Why It's A Great ETF To Play The Stock Market In 2024

Covered call ETFs have gained popularity for their ability to provide equity upside and regular income. The JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) is a popular covered call fund that has collected nearly $9 billion in assets. However, now is not the right time to own JEPQ because it is likely to underperform in a bull market.

JEPQ: More Underperformance Ahead

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Total Return is the actual rate of return for an investment over a given evaluation period, typically one, three, five, or ten years. The Total NAV Return is the sum of all dividends/distributions, assuming they are reinvested, plus the change in the NAV of the fund, be it positive or negative. However, managing our portfolio is not only about applying financial rules, because it is not certain that dividends can and will always be reinvested.

My 9% Income Portfolio-Living Off Dividends

The JPMorgan Equity Premium Income ETF (JEPI) and JPMorgan Nasdaq Equity Premium ETF (JEPQ) had a strong performance in 2023 in terms of assets. JEPI's total assets surged by over $12 billion and hit $30 billion.

JEPI and JEPQ ETFs had record inflows in 2024: were they worth it?

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The Fed was more dovish than expected, discussing future target rates and leaving the door open for an additional rate hike if needed. The Dividend Harvesting Portfolio finished up 7.53% on invested capital with a balance of $15,699.41, generating $24.43 in dividend income in week 146. The portfolio has experienced a nice rally and is generating weekly income, with a goal of mitigating downside risk and generating continuous dividend income.

Dividend Harvesting Portfolio Week 146: $14,600 Allocated, $1,291.18 In Projected Dividends

I bought JEPQ when it was young on Nov 8, 2022. I also wrote the first SA article about it on Nov 24, 2022. The reasons I no longer like JEPQ include macroeconomic changes, crowding issues, and technical changes in the option markets. I'm still constructive on the overall market. There are just better ways to play it.

Why I Sold Out Of JEPQ

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"We are absolutely going to see more of these options-based products come to market. We see it in our own book," BNY Mellon's Ben Slavin said.

This ETF offering could become next year's hot product

Several leading investors have recently expressed concern about the attractiveness of leading mega-cap technology stocks. We examine their concerns. We then compare JPMorgan Equity Premium Income ETF and JEPQ side-by-side with their concerns and other factors in mind to see which is the better buy for massive monthly dividends.

Billionaires Bearish On Magnificent 7: JEPI Or JEPQ For Massive Dividends?

The Fed's dovish statement has fueled a bullish case for 2024, benefiting income-producing assets and big tech. The JPMorgan Nasdaq Equity Premium Income ETF is well-positioned to capitalize on a bull cycle and generate monthly income. Lower yields and a lower Fed funds rate in the future are bullish for the market, making JEPQ an appealing hybrid solution for investors.

The Fed Has Spoken And JEPQ Is Positioned For Growth And Income In 2024

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The markets had a strong week fueled by optimistic economic data, with the S&P 500 increasing by 1.2% and the Dow Jones climbing by 2.41%. The Dividend Harvesting Portfolio finished up 5.17% on invested capital, generating $17.17 in dividend income in week 145. The portfolio is positioned well for the future, with a focus on generating ongoing dividend income while mitigating downside risk.

Dividend Harvesting Portfolio Week 145: $14,500 Allocated, $1,274.81 In Projected Dividends

JPMorgan Nasdaq Equity Premium Income ETF currently offers a dividend yield of 10.4% on a TTM basis. It is not only high in absolute terms but also higher than its sister fund JEPI and its own historical average. The accuracy of JEPQ's historical average yield (and JEPI's too) is questionable due to limited historical data.

JEPQ's 10%+ Yield: Not As High As It Seems

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The Dividend Harvesting Portfolio finished the week down -0.97% on invested capital with a balance of $13,963.69. The portfolio generated $20.73 of income in week 141, bringing the total dividend income for 2023 up to $833.54. The top 10 positions in the portfolio have generated $460.94 in dividends, with a total investment value of $4,925.64.

Dividend Harvesting Portfolio Week 141: $14,100 Allocated, $1,241.89 In Projected Dividends

JPMorgan Nasdaq Equity Premium Income ETF claims to offer current income, volatility management, and exposure to the Nasdaq 100 index. The fund aims to deliver both capital appreciation and current income, with a whopping 11.76% yield and volatility lower than the index. JEPQ's underperformance in total return, volatility, and income distributions compared to alternative strategies make it a sub-par choice for income portfolios.

JEPQ: Equity Premium Still Not Attractive Over Alternatives

JEPI and JEPQ are two of the most popular income ETFs in the market today and with good reason. Both have high yields, with JEPI yielding 9.3% and JEPQ 11.1%. JEPQ has outperformed the S&P 500 since inception, a rare feat for an income fund. JEPI has not, but returns have been much more stable, and consistent.

JEPI Vs. JEPQ: Which Is Best For Income Investors And Retirees?

JPMorgan Nasdaq Equity Premium Income ETF continues to outperform other covered call funds as it's having a great year. JEPQ holds big tech stocks like Microsoft, Apple, Amazon, and Nvidia, which have been outperforming the market. JEPQ is actively managed, selling options slightly out of the money and adjusting its position on a weekly basis.

JEPQ Continues To Deliver Outsized Returns

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Core CPI continued to fall while CPI remained flat, potentially influencing the Fed's decision to hold rates at the next meeting.

Dividend Harvesting Portfolio Week 137: $13,700 Allocated, $1,197.09 In Projected Dividends

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News for JPMorgan Nasdaq Equity Premium Income ETF ETF (JEPQ)