To The Moon

When we talk about ETFs, the first names that often come to mind are the SPDR S&P 500 ETF (NYSEARCA: SPY) and the Vanguard 500 Index Fund ETF (NYSEARCA: VOO), among other common ETFs. These investment tools that track the S&P 500 index are indeed the preferred choice for many retail investors today. However, there are other ETFs in the market that may prove to be valuable additions to your investment portfolio. In the current volatile market environment, finding investments that can withstand both bull and bear markets is particularly important. Today, I will introduce three ETFs that are suitable for the current market and have the potential to navigate through market fluctuations. Covered Call Options ETF - JPMorgan Equity Premium Income ETF (JEPI) JEPI is one of the most popular actively managed ETFs this year. It invests in large-cap U.S. stocks while prioritizing low volatility for investors. JEPI holds value stocks with favorable risk-return characteristics and utilizes structured notes (ELN) as part of its covered call options strategy. According to its latest prospectus, the fund has a 12-month trailing dividend yield of 10.58%, which is an attractive return even in today's high-interest-rate environment. The fund benchmarks against the S&P 500 Total Return Index and has three core objectives: Generate income by combining options selling with investments in large-cap U.S. stocks, seeking monthly income from related option premiums and stock dividends. Build a diversified, low-volatility stock portfolio through a proprietary research process, aiming to identify undervalued and overvalued stocks with attractive risk-return characteristics. Strive to provide most of the returns related to the S&P 500 Index with lower volatility, in addition to monthly income. Year-to-date, JEPI has shown steady performance (+1.83%), though slightly trailing the broader S&P 500 Index (SPY) gain (+10%). However, many investors in this fund primarily seek dividends, which make it an attractive option for certain investors. Investors should be aware of the risks associated with investing in JEPI: JEPI has only been in existence for two years, and while its performance has been impressive, it may not yet have demonstrated the ability to navigate various market conditions over the long term. The covered call strategy may underperform in a strongly bullish market. Last year's bull market performance may be attributed to the market's stable rise. However, if there is a violent rebound in the market, JEPI's ability to maintain its performance remains uncertain. JEPI is an actively managed fund, and the choice of underlying assets and the strategies applied will introduce some unknown risks for investors. Additionally, actively managed ETFs tend to have slightly higher management fees compared to passive ETFs, with JEPI's management fee currently at 0.35%, slightly higher than SPY's 0.05%. In summary, JEPI is a relatively low-risk ETF that provides stable cash flow, making it a reassuring choice in bear markets. In bull markets, its performance is average, at least not causing investors to worry about missing out on significant gains. Dividend Income ETF - Amplify CWP Enhanced Dividend Income ETF (DIVO) Dividend stocks are a special presence in the current turbulent market environment. In bull markets, dividend stocks often receive less attention, with their relatively low annual dividend yields. However, in bear markets, the importance of dividend stocks becomes evident. Even in bear market investing, it's essential to look for dividend stocks with strong fundamentals and potential for stock price appreciation, and this is where ETFs like DIVO come into play. DIVO's dividend yield typically stays between 5% and 6%, and the current yield is 4.91%. From a return perspective, since the fund's inception in 2016, DIVO has achieved a total return of 92.75%, with an annualized return of 12.98%. This is slightly lower than the broader market's 100.48% total return and 13.81% annualized return. DIVO's primary advantage is its exceptional performance in bear markets. In this year's bear market, excluding dividends, DIVO only declined by 0.6%. DIVO's ability to maintain long-term stable performance is closely related to its underlying holdings. Among its top ten holdings are stocks such as UnitedHealth Group, Chevron, McDonald's, Johnson & Johnson, and Waste Management, which are high dividend-yielding and extremely stable stocks. It also includes growth-oriented dividend stocks like Apple, Microsoft, Goldman Sachs, and Home Depot. On the downside, there are a few considerations for DIVO: DIVO has a management fee of 0.55%, which is relatively high among ETFs. The fund lacks diversification, with a total of 27 holdings, which means it may have relatively high single-stock risk. Overall, DIVO's investment logic primarily focuses on dividends and emphasizes the irreplaceable role of dividend stocks in bear markets. It offers stronger resistance to economic downturns compared to JEPI, although its potential for returns may be slightly lower. Low Volatility ETF - iShares MSCI USA Minimum Volatility Factor ETF (USMV) When it comes to low-volatility stocks, some may think they are less profitable. While they may protect against market downturns, they may not generate substantial returns in the long run. However, there's a common misconception among investors that low risk equals low returns. USMV's fund description states that their goal is to provide returns as close as possible to the market while offering reduced volatility. Over the past 11 years, USMV has provided nearly identical annualized returns to the broader market but with only about 70% of the risk. USMV's top ten holdings include stable stocks such as Johnson & Johnson, Verizon, PepsiCo, and Berkshire Hathaway. Looking at their long-term performance, USMV's returns have been almost identical to the broader market, highlighting that low volatility does not necessarily equate to low returns. However, due to its lower volatility, USMV may miss out on some of the short-term gains in a market rebound. In a nutshell, USMV can be viewed as a low-volatility version of a broad market index. In the long run, the performance of the two is quite similar, but in a bear market environment, investing in USMV may offer greater peace of mind. These three ETFs are all focused on balancing risk and return, which can be a reassuring approach for investors in the current market environment.