How does JEPI make money? (2024)

How does JEPI make money?

Here's how it works: We use fundamental bottom-up research to build a higher-quality, lower-beta portfolio of U.S. large cap equities with less volatile earnings and share prices. We then sell index options against that long-only portfolio and use the premiums to generate income.

How does JEPI have such a high yield?

It's important for investors to understand that JEPI is not a pure equity ETF, it's a covered call ETF, which generates a high yield by selling call options against holdings within the portfolio.

What is the downside of JEPI?

Therefore, the premiums on these option contracts, as well as any other income you earn, will most likely be taxed at ordinary income rates, depending on your country. This makes JEPI unsuitable for investors who wish to reinvest these dividends manually, as the growth may be negatively affected by tax.

How does JEPQ generate income?

JEPQ is an appealing option for income investors or for growth investors looking to add some yield to their portfolios. It pays a monthly distribution, and it generates this income by owning some dividend stocks and, as mentioned earlier, selling covered calls to generate additional income.

Is JEPI yield sustainable?

JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI) is designed primarily for income-focused investors as it pays a monthly dividend. Based on its relatively attractive 8.3% payout, it's expected to be a core holding of income investors looking to focus on generating a sustainable monthly dividend.

Why not buy JEPI?

JEPI Under The Covers

The covered call exposure is offered by counterparties, which comes with credit risk and counterparty exposure that may not be expected by most investors. The level of risk is likely small in normal market conditions, but has potential meaningful implications in "black swan" situations.

Is JEPI a bad investment?

Is JEPI a Good Investment? JEPI can be a good investment for more experienced, risk-averse investors who are looking for an ETF that can provide low-volatility, stocklike returns with superior yields. However, JEPI may not be for beginners or long-term investors.

What could go wrong with JEPI?

I've heard some people complain that JEPI doesn't use a traditional covered call strategy where it owns the stocks & writes the call simultaneously and the use of ELNs introduces counterparty risk where it wouldn't otherwise.

Is JEPI safe for retirement?

Summary. Passive income is a great way to save for retirement. JEPI is popular among retirees due to its high yield, monthly payouts, and diversification that includes considerable tech exposure.

Is JEPI taxed as income?

JEPI may be tax-inefficient, as distributions from the fund may be taxed as income, and dividends from underlying stock holdings are not considered qualified because of the offsetting options positions. JEPI isn't eligible for Tax-Loss Harvesting, since we can't find a viable alternate fund.

Is JEPQ safe in a recession?

JEPQ will likely be too volatile for traditional dividend and income investors. Still, for more aggressive individuals looking for income, this ETF should offer significant income in a recession.

Is JEPI a hedge fund?

JEPI offers a hedge-fund like strategy in an ETF wrapper, and investors and advisers should consider whether JEPI is suitable for their objectives. It is quite reasonably priced for what it offers.

Is JEPI or JEPQ better?

The current volatility for JPMorgan Equity Premium Income ETF (JEPI) is 2.26%, while JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) has a volatility of 3.39%. This indicates that JEPI experiences smaller price fluctuations and is considered to be less risky than JEPQ based on this measure.

Is JEPI a long-term investment?

JEPI can be a good investment for more experienced, risk-averse investors who are looking for an ETF that can provide low-volatility, stocklike returns with superior yields. However, JEPI may not be for beginners or long-term investors.

Is JEPI better than SCHD?

SCHD - Volatility Comparison. The current volatility for JPMorgan Equity Premium Income ETF (JEPI) is 2.32%, while Schwab US Dividend Equity ETF (SCHD) has a volatility of 3.77%. This indicates that JEPI experiences smaller price fluctuations and is considered to be less risky than SCHD based on this measure.

What ETF has 12% yield?

Why is JEPI so popular?

JEPI produces high income

The psychological "kick" from seeing a big dividend payment hit an account can be exhilarating. This appeal becomes more alluring for those investing in a tax-deferred or exempt account like a Roth IRA, or for those looking for steady monthly income to fund withdrawals.

Is JEPI good for a Roth IRA?

To unlock greater income potential in a Roth IRA, investors can opt for a derivative income fund such as JEPI, which uses more complex options selling strategies to produce higher-than-average yields.

Is JEPI good for dividends?

An Above-Average Monthly Dividend

JEPI's 7.5% yield is substantial. Not only is it significantly higher than the average yield for the S&P 500 (currently just 1.4%), but it's also much higher than the risk-free yield offered by investing in 10-year treasuries (currently 4.2%).

How is JEPI stock taxed?

Jepi ETF – taxes

In short, you will be taxed at ordinary and qualified dividend income levels, aka at your ordinary income rate and at your long-term capital gains tax rate.

How much does JEPI pay each month?

It should be noted that JEPI's dividend payout can vary from month to month, but it currently yields an attractive 10.2%. Using the last 12 months' payments, which range from $0.29 to $0.61 cents, we can simplify things by saying that the average dividend payment works out to $0.46 per month.

How much does JEPI pay per dividend?

JEPI's next quarterly payment date is on Apr 04, 2024, when JEPI shareholders who owned JEPI shares before Apr 01, 2024 received a dividend payment of $0.34 per share. Add JEPI to your watchlist to be reminded of JEPI's next dividend payment.

What are the top 10 holdings of JEPI?

How many times a year does JEPI pay dividends?

JEPI has a dividend yield of 7.52% and paid $4.26 per share in the past year. The dividend is paid every month and the last ex-dividend date was Apr 1, 2024.

Is JEPI a good investment 2024?

But that's not the only thing to consider for JEPI in 2024 - as many "price action analysts" are predicting a modest pullback this year after rate cuts go into effect during the second half of the year. If you're in this camp, perhaps JEPI will be able to provide your portfolio with stability amid the volatility.