JPMorgan Equity Premium Income ETF (JEPI) was one of the most beloved exchange-traded funds (ETFs) of 2022, thanks to its low volatility and sky-high monthly yield. But JEPI is a powerful tool that must be used wisely if investors are to make the most of its potential. In this article, we’ll take a look at what makes JEPI such a great investment, its top holdings and risks, and how to use it to generate monthly income.
JEPI seeks to generate monthly income with less volatility. The dividend-focused fund generates income through selling options and investing in dividend-paying stocks and other income-producing securities. The ETF has an expense ratio of 0.45% and is managed by JPMorgan Asset Management. JEPI employs a bottom-up fundamental stock selection and considers also financially stable companies.
JPMorgan Equity Premium Income ETF aims to provide current income while maintaining prospects for capital gains. The ETF is designed to capture the performance of a portfolio of dividend-paying equity securities while reducing volatility. JEPI is a well-diversified fund that skews towards defensive large-cap U.S. dividend stocks. JEPI's top holdings include financial companies such as JPMorgan Chase & Co., Bank of America Corporation, Wells Fargo & Co., and Citigroup Inc., as well as other dividend-paying stocks such as Exxon Mobil Corporation, Microsoft Corporation, AT&T Inc., and Pfizer Inc.
JEPI has a less concentrated defensive equity portfolio that employs a bottom-up fundamental stock selection. JEPI considers also financially stable companies and seeks to generate income from covered calls and Equity Linked Notes or ELNs. These notes provide a fixed return plus a portion of the appreciation or depreciation of the underlying stock. JEPI also invests in fixed income securities such as U.S. Treasuries and corporate bonds.
JPMorgan Equity Premium Income ETF (Ticker: JEPI) The ETFs that showed up on the screen included JPMorgan's actively managed equity and fixed income ETFs. JEPI is an actively managed ETF that seeks to generate income through selling options and investing in dividend-paying stocks, fixed income securities and other income-producing securities.
JEPI relies on generating income from covered calls and Equity Linked Notes or ELNs. These notes provide a fixed return plus a portion of the appreciation or depreciation of the underlying stock. JEPI has the ability to generate income through writing covered calls and selling naked puts. The ETF also invests in fixed income securities such as U.S. Treasuries and corporate bonds.
JEPI's active management approach also seeks to reduce volatility and provide investors with a higher level of returns than passive investments. The ETF uses a variety of investment strategies to capture market gains while mitigating losses. JEPI also employs its own proprietary risk management system to help protect investors from market downturns.
That said, JEPI seeks to compensate investors for their greater expense by implementing a more sophisticated active investment strategy by focusing on dividend-paying stocks and other income-producing securities. JEPI also employs an options-based strategy to help generate income while reducing volatility.
The JPMorgan Equity Premium Income ETF (JEPI) has been able to take advantage of rising volatility in the stock market to beat the total return of the S&P 500 index over the last few years. JEPI has also been able to outperform its benchmark and peers in terms of risk-adjusted performance.