Is JEPI a good investment? (2024)

Is JEPI a good investment?

JEPI is not a bad ETF, but it and its peer group (covered call ETFs) are overrated by investors. And the cracks are starting to show. Extended down markets that don't immediately get back up are a risk to these ETFs not fully understood by many investors.

Is JEPI a good fund to invest in?

The JPMorgan Equity Premium Income ETF is a popular dividend and income fund that sells equity linked notes to generate steady income. JEPI has performed well since its inception in 2020, offering investors solid returns and steady income, particularly in volatile market conditions.

Can you hold JEPI long term?

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 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.

Is JEPI overvalued?

Summary. JPMorgan Equity Premium Income ETF has failed to keep up with the total return of the S&P 500 index. The JEPI fund's portfolio includes overvalued stocks despite the defensive intent of the ETF.

Why not to invest in JEPI?

One reason why JEPI is not a great choice for retirees is that its 0.35% expense ratio is rather high compared to many other passive income funds. For example, SCHD's expense ratio is only 0.06%. While over a single year, 0.29% does not seem like very much, throughout a long period that amount can add up.

What are the disadvantages of JEPI?

The downside of such a strategy is that it caps a lot of, if not all, share price appreciation potential because in a rising market, the call options would be exercised by the buyer at below market prices. That gives covered call ETFs a bit of an uneven return profile.

Is SCHD better than JEPI?

Overall, SCHD is a better option if you are looking for a passively managed ETF with a low expense ratio and consistent performance over the last ten years. If you want an actively managed ETF with a high dividend yield over the last several years and a well-diversified portfolio, then JEPI is a better option.

Is the JEPI dividend a buy or sell?

JEPI 20-day moving average is 56.85, which suggests JEPI is a Sell.

Is JEPI good for an IRA?

Both funds are best in retirement accounts to reduce taxation on dividend payments. But JEPI's 9%+ dividend is critically impacted by taxation in taxable accounts. Buy JEPI in an IRA or Roth to maximize the income benefit. SCHD is better for taxable accounts than JEPI.

Is JEPI a conservative investment?

JEPI is a conservative equity solution comprised of two fundamental building blocks: a defensive equity portfolio of U.S. large cap stocks and a disciplined options overlay.

How is JEPI income taxed?

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.

What ETF has 12% yield?

Is JEPI safe for retirement?

In other words, those who think they can safely buy 100% JEPI and retire rich are taking on much more income risk than they believe, especially if they think JEPI's income will keep rising yearly. You should know that ELN and covered call income are generally taxed at ordinary rates.

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 tax efficient?

- 80-85% of JEPI's dividends are taxed as ordinary income, thus it's optimal to own it in tax-deferred retirement accounts.

Can an ETF become worthless?

In fact, 47% of all such funds have closed down, compared with a closure rate of 28% for nonleveraged, noninverse ETFs. "Leveraged and inverse funds generally aren't meant to be held for longer than a day, and some types of leveraged and inverse ETFs tend to lose the majority of their value over time," Emily says.

Is JEPI better than spy?

SPY - Performance Comparison. In the year-to-date period, JEPI achieves a 2.59% return, which is significantly lower than SPY's 5.42% return. The chart below displays the growth of a $10,000 investment in both assets, with all prices adjusted for splits and dividends.

What is the best dividend ETF?

What is the alternative to JEPI?

FEPI seeks to replicate JEPI's strategy of selling covered calls to generate monthly income for investors and an above-average dividend yield. However, it eschews JEPI's diversification and invests in a handful of top tech stocks.

Does JEPI pay dividends every month?

JEPI has a dividend yield of 7.59% 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.

What is the downside of owning an ETF?

ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. Unlike mutual funds, ETF shares are bought and sold at market price, which may be higher or lower than their NAV, and are not individually redeemed from the fund.

Should I hold JEPI and SCHD?

The correlation between JEPI and SCHD is 0.79, which is considered to be high. That indicates a strong positive relationship between their price movements. Having highly-correlated positions in a portfolio may signal a lack of diversification, potentially leading to increased risk during market downturns.

Why is SCHD so popular?

Overall, SCHD remains an attractive option for investors looking to balance income and growth in their portfolio. Its focus on quality large cap dividend payers, low expense ratio, and strong historical performance make it a solid choice for diversification and long-term investing.

Why is the JEPI dividend dropping?

During the high volatility period between 2020 - 2022, we saw the yield reach as high as 13%. Now that markets are not as volatile, the yield has come down to about 8.4%, where the fund originally aimed to have the yield. I think the dividend here is best utilized by the retired investor.