JEPI: Not Working Out As Expected

seekingalpha04-03

Dragon Claws The JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI) was launched in 2020 as a way for investors to earn additional premium income from a growth portfolio. The exchange-traded fund, or ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2424839885?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1451567017/image_1451567017.jpg","is_english":true,"pubTime":"2024-04-03 08:00","share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","id":"2424839885","market":"us","top_or_hot":-1,"title":"JEPI: Not Working Out As Expected","media":"seekingalpha","content":"<div>\n<p>Dragon Claws The JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI) was launched in 2020 as a way for investors to earn additional premium income from a growth portfolio. The exchange-traded fund, or ...</p>\n\n<a href=\"https://seekingalpha.com/article/4681819-jepi-not-working-out-as-expected\">Source Link</a>\n\n</div>\n","source":"seekingalpha_fund","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>JEPI: Not Working Out As Expected</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nJEPI: Not Working Out As Expected\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-03 08:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4681819-jepi-not-working-out-as-expected><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Dragon Claws The JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI) was launched in 2020 as a way for investors to earn additional premium income from a growth portfolio. The exchange-traded fund, or ...</p>\n\n<a href=\"https://seekingalpha.com/article/4681819-jepi-not-working-out-as-expected\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0171293334.USD","symbol_name":"贝莱德英国基金A2","start_time":0,"source_url":"https://seekingalpha.com/article/4681819-jepi-not-working-out-as-expected","article_id":"2424839885","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1451567017/image_1451567017.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2424839885","pubTimestamp":1712102438,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Dragon Claws The JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI) was launched in 2020 as a way for investors to earn additional premium income from a growth portfolio. The exchange-traded fund, or ","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0171293334.USD":"贝莱德英国基金A2","LU0109392836.USD":"富兰克林科技股A","SPY":"标普500ETF","IE00BMPRXN33.USD":"NEUBERGER BERMAN 5G CONNECTIVITY \"A\" (USD) ACC","OEF":"标普100指数ETF-iShares","LU0353189763.USD":"ALLSPRING  US ALL CAP GROWTH FUND \"I\" (USD) ACC","BK4107":"财产与意外伤害保险","FDN":"First Trust Dow Jones Internet I","LU0130102774.USD":"Natixis Harris Associates US Equity RA USD","BK4554":"元宇宙及AR概念","IVV":"标普500指数ETF","MSFT":"微软","BK4567":"ESG概念","SGXZ23171101.USD":"NIKKO AM SHENTON GLOBAL OPPORTUNITIES (USD) ACC","BK4585":"ETF&股票定投概念","BK4576":"AR","LU0354030511.USD":"ALLSPRING  U.S. LARGE CAP GROWTH \"I\" (USD) ACC","LU0149725797.USD":"汇丰美国股市经济规模基金","BK4525":"远程办公概念","LU0354030438.USD":"富国美国大盘成长基金Cl A Acc","IE0009356076.USD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A2\" (USD) ACC","AMZN":"亚马逊","BK4524":"宅经济概念","SSO":"两倍做多标普500ETF","IE00BLSP4452.SGD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis SGD-H Plus","BK4559":"巴菲特持仓",".SPX":"S&P 500 Index","LU0234570918.USD":"高盛全球核心股票组合Acc Close","JEPI":"JPMorgan Equity Premium Income ETF","SDS":"两倍做空标普500ETF","OEX":"标普100","SH":"标普500反向ETF","LU0238689110.USD":"贝莱德环球动力股票基金","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","IE00B19Z3581.USD":"Legg Mason ClearBridge - Value A Acc USD","LU0642271901.SGD":"Janus Henderson Horizon Global Technology Leaders A2 SGD-H","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","IE00BJTD4V19.USD":"NEUBERGER BERMAN US LONG SHORT EQUITY \"A1\" (USD) ACC","IE00B7SZLL34.SGD":"Legg Mason ClearBridge - Value A Acc SGD-H","BK4551":"寇图资本持仓","LU0208291251.USD":"FRANKLIN MUTUAL U.S. VALUE \"A\" (USD) INC","GB00BDT5M118.USD":"天利环球扩展Alpha基金A Acc","META":"Meta Platforms","LU0082616367.USD":"摩根大通美国科技A（dist）","SPXU":"三倍做空标普500ETF","PGR":"美国前进保险公司","LU0353189680.USD":"富国美国全盘成长基金Cl A Acc","IE00BBT3K403.USD":"LEGG MASON CLEARBRIDGE TACTICAL DIVIDEND INCOME \"A(USD) ACC","UPRO":"三倍做多标普500ETF"},"translate_title":"杰皮：没有像预期的那样工作","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AMZN":1,"JEPI":1,"META":1,"MSFT":1,"PGR":1,"SPY":0.9,"FDN":0.9,"UPRO":0.6,"SPXU":0.6,".SPX":0.6,"SSO":0.6,"OEF":0.6,"OEX":0.6,"SDS":0.6,"SH":0.6,"ESmain":0.6,"IVV":0.6},"content_text":"Dragon Claws The JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI) was launched in 2020 as a way for investors to earn additional premium income from a growth portfolio. The exchange-traded fund, or ETF, has failed miserably to keep up with the performance of the S&P 500 benchmark index (SP500) during the nearly 4-year period despite the fund generating premium income for investors. My investment thesis is negative on the ETF considering the portfolio is full of overvalued stocks. Premium Income Concept JEPI operates in the derivative income fund category and is apparently rated as a 5-star fund by Morningstar. The ETF seeks to deliver monthly distributable income and equity market exposure with less volatility. Source: JEPI website The fund proposes investments in a defensive portfolio based on fundamental research combined with a disciplined options overlay implementing out-of-the-money S&P 500 index call options to generate distributable monthly income. JEPI has roughly 20% of its portfolio invested in ELNs, capping the capital appreciation upside to generate premium income. JEPI currently offers a 7.3% dividend yield annualized based on the $0.3452 distribution for the month of March payable in April. JPMorgan lists the ETF as having an 8.5% 12-month rolling dividend yield prior to the current distribution. The portfolio holdings aren't so defensive considering the inclusion of Amazon.com, Inc. (AMZN), Microsoft Corporation (MSFT), and Meta Platforms, Inc. (META) in the top 5 holdings. Some of the other stocks in the top 10 holdings are more defensive, but the top holding The Progressive Corporation (PGR) has nearly doubled in the last few months. Source: JPMorgan JEPI has a portfolio of stocks trading at 21x forward EPS estimates. The model is similar to the S&P 500 trading at 21x forward earnings, but the ETF isn't producing any premium performance in the process, nor is the fund defensive with such a rich P/E valuation. The fund now has nearly $34 billion in assets likely contributing to the struggle to produce premium income and even market-matching returns. Premium Income Volatility For an investor that only cares about large dividend payouts, JEPI is achieving that goal. The current dividend yield is ~7.3%, while the S&P 500 only achieves a 1.3% yield currently. One of the most notable issues with the ETF is shrinking dividend payouts. Typically, an income investor wants consistent dividend payouts and JEPI saw the monthly distributions top $0.60 during several months in 2022 to only see the payouts plunge by 50% by mid-2023. Source: Seeking Alpha The biggest issue is dividend investors possibly not understanding the volatility in the monthly payouts. The ETF sees wild fluctuations in the premium income earned via the options overlay strategy. That, combined with a 190% turnover in the portfolio, contributed to the lack of stability. Besides the issue of not generating consistent income, JEPI fails to produce capital returns similar to the S&P 500 index despite being invested in the most aggressive stocks in the index due to 20% of the portfolio having capped returns due to the ELN call options strategy. Over the last 3 years, the ETF has seen a negative price return, even as the S&P 500 index is up nearly 30%. Source: Seeking Alpha The end result is a total return underperforming the S&P 500 despite being aggressively invested in richly valued S&P 500 stocks. In fact, the portfolio managers take on further risk via an options strategy to enhance the income, yet the ETF doesn't come anywhere close to matching the performance of an investor just investing directly in the S&P 500 index. Investors willing to accept volatile monthly payouts are somewhat content with yields in excess of treasuries or high-yielding savings accounts. In theory, the ETF would protect capital during downturns, but investors need to appreciate these funds only benefit investors when just held during the downturn period. The stock market faced considerable weakness during 2022, yet the above price return chart highlights how the reduced volatility of JEPI during the 2022 weakness only led to a weaker performance during the up periods in rallies during 2020, 2021, and 2023. Takeaway The key investor takeaway is that JPMorgan Equity Premium Income ETF is another fund where investors would just be better off owning the S&P 500 Index. The fund managers built a covered call ETF strategy to generate a premium income stream, but the capital returns have been considerably weak during the process and the monthly dividend distributions are very volatile.  JEPI isn't a low-risk way to earn income in excess of a savings account due to 80% of the fund having equity risk. The ETF is ultimately a way to underperform the S&P 500 while using a complex ELN call option strategy when the best investing solution is usually just taking the simplest solution of buying the benchmark index.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2424839885"}