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Proprietary Data Insights Financial Pros Nontraditional Equity ETF Searches in the Last Month
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ETFs |
An ETF With a One-Two Punch |
Many of Wall Street’s top money managers tend to be cautious about equities at the start of the first quarter, with several of them preaching capital preservation. According to the latest data from our proprietary sentiment indicator, Trackstar, we’re seeing that trend unfold now. For example, the JPMorgan Equity Premium Income ETF (JEPI) recently became one of financial pros’ most searched ETFs. It has a one-two punch, paying a dividend north of 11% while still offering investors a chance at capital appreciation. If you’re an income investor, it’s hard not to like the ETF’s monthly dividend distributions. But is this nontraditional equity ETF good enough to add to your portfolio? Read on for our take. JPMorgan Equity Premium Income ETF JPMorgan Equity Premium Income ETF seeks to deliver monthly distributable income and stock market exposure with less volatility. JEPI is actively managed. It invests in fundamentally strong large-cap stocks utilizing proprietary risk-adjusted stock returns. In addition, it sells out-of-the-money S&P 500 call options to generate distributable monthly income. Key Facts About JEPI
The top 10 holdings make up 16% of the fund’s weighting. Source: JPMorgan JEPI diversifies its holdings across different sectors fairly evenly. Healthcare stocks are 14.2% of the portfolio, industrials 16.4%, consumer staples 13.4%, financials 15.9%, information technology 9.0%, and utilities 9.5%, with the remainder split among real estate, consumer cyclical, energy, and telecommunications. Performance Hamilton Reiner and Raffaele Zingone manage JEPI. They have over 60 years of combined experience. But JEPI is relatively new. It began trading in 2020. Source: JPMorgan It has delivered returns of 14.7% since inception. Trading & Investing in JEPI JEPI trades an average daily stock volume of 3.4 million shares. Options are also available for trading. The ETF’s monthly dividend currently yields 11.74%. Competition Investors seeking a nontraditional equity ETF have several options on the table. Some of them include the Global X Nasdaq 100 Covered Call ETF (QYLD), Amplify CWP Enhanced Dividend Income (DIVO), Global X Russell 2000 Covered Call ETF (RYLD), and Global X S&P 500 Covered Call ETF (XYLD). Portfolio Composition
Holdings
JEPI has fewer holdings than XYLD and RYLD, but it’s more diversified, with a smaller top-10 concentration of 16% vs. 24.7% and 34.2%. Fees
JEPI charges a management fee of 0.35%, which is extremely competitive for an actively managed ETF. Dividend
RYLD, XYLD, and QYLD may pay higher dividends than JEPI, but they hold riskier portfolios based on stock concentration. Performance Over the Last Year
None of the ETFs we’ve reviewed today had positive returns over the last 12 months. But when you factor in dividends, JEPI and DIVO performed the best. Our Opinion 9/10 JEPI offers investors a chance at capital appreciation while generating monthly income. When you factor in dividends, it outperformed the S&P 500 and Dow Jones Industrial Average over the last 12 months. While it’s a relatively new ETF, it has an experienced team behind it. We like JEPI in this market environment and believe investors should consider adding it to their portfolios. |
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