Is JEPI tax efficient? (2024)

Is JEPI tax efficient?

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 are the disadvantages of JEPI?

Cons of Investing in JEPI

Option risk: The covered call strategy used by JEPI presents option risk, which is present if the price of the underlying stock increases significantly, and the ETF may have to sell the stock at the strike price, which could result in a loss.

Why is JEPI high risk?

Disclosure: JEPI RISK SUMMARY: The price of equity securities may fluctuate rapidly or unpredictably due to factors affecting individual companies, as well as changes in economic or political conditions. These price movements may result in loss of your investment.

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 worth holding?

What do analysts say about JEPI? JEPI's analyst rating consensus is a Moderate Buy. This is based on the ratings of 120 Wall Streets Analysts.

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.

Is JEPI safe long term?

Due to its defensive structure, JEPI may underperform in the long run. This is not necessarily a bad thing because we are not forgetting what we like about JEPI: low volatility. Reducing it comes at a price and in this case it is not too high.

How safe is JEPI stock?

However, it is important to note that JEPI is not a safe ETF by any means. A covered call strategy can buffer against losses, but only to the amount of premium received. It is not a true hedge, and still exposes investors to more or less the same downside risk.

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.

What is the tax rate for JEPI?

The effective JEPI tax rate for high-income investors is close to 50% if owned in taxable accounts. 5.6% mid-range post-tax returns compared to about 8.5% for the S&P is a lot less exciting. But there is one final important thing to know about covered call ETFs like JEPI.

What ETF has 12% yield?

Is schd tax efficient?

Tax Efficiency – Tie

ETFs tend to distribute comparatively fewer capital gains to shareholders – these same gains are simply more challenging to manage efficiently from a mutual fund. Since both VOO and SCHD are ETFs, they offer the same tax advantages and efficiencies.

Can you buy JEPI in 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.

Why is JEPI so popular?

So over the past two years, JEPI has outperformed the market during bad times and lagged the market during good times while still producing double-digit annualized returns and paying its investors a monthly dividend, which pretty much sums up its value proposition for investors.

Is JEPI good in a bear market?

In a bear market, the fund will experience all of the downside of the underlying equity portfolio, but the high yield helps offset some of the losses. It's a bit of a narrow target to hit, but income investors appreciate these funds for their often much above average dividend yields and lower risk.

Who are the largest holders of JEPI?

Largest shareholders include Morgan Stanley, Bank Of America Corp /de/, Jpmorgan Chase & Co, Wells Fargo & Company/mn, JNBAX - JPMorgan Income Builder Fund Class A, Royal Bank Of Canada, Advisor Group Holdings, Inc., Global Assets Advisory, LLC, Envestnet Asset Management Inc, and UBS Group AG .

Why is JEPI dropping?

JEPI's distributions declined by almost 30% from 2022 to 2023, due to lower option prices and premiums from decreased equity volatility. Distributions remain higher than during 2021, however. Distributions seem unlikely to recover, although much will depend on future option prices.

Should I buy JEPI or JEPQ?

The current volatility for JPMorgan Equity Premium Income ETF (JEPI) is 2.12%, while JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) has a volatility of 3.81%. This indicates that JEPI experiences smaller price fluctuations and is considered to be less risky than JEPQ based on this measure.

What is the best dividend ETF?

Is SPYI better than JEPI?

JEPI's total returns were 9.81% with price returns of 0.90% over the same period. SPYI remains a consistent outperformer within the category and has a management fee of 0.68%.

Is the JEPI dividend a buy or sell?

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

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.

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.

Why is JEPI taxed differently?

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.

How do I avoid taxes on my ETF?

One common strategy is to close out positions that have losses before their one-year anniversary. You then keep positions that have gains for more than one year. This way, your gains receive long-term capital gains treatment, lowering your tax liability.