To The Moon

Hi tiger brothers and sisters, today I'll share an interesting  US stock with all of you! 

$JPMorgan Equity Premium Income ETF(JEPI)$  

I'm sure most people here have lots of tech stocks in our portfolio. For year 2023, I'm going to try something different. 

I'm going to buy a non-tech stock in 12 different tranches that pays monthly dividend ($1k per month over a year plus reinvest the dividend from previous month)

The JPMorgan Equity Premium Income ETF is managed by J.P. Morgan Asset Management, Inc. The fund invests in public equity markets. The fund invests directly and through other funds in stocks of companies operating across diversified sectors. It invests in volatile stocks of companies across diversified market capitalization. It invests in stocks of companies that are deemed socially conscious in their business dealings and directly promote environmental responsibility.

JEPI has $4.2b in assets and provides investors with an 8.4% yield. The managers charge 35bps in fees; in line with other actively-managed ETFs. What make JEPI different from most other high-yield equity funds is their use of Equity-Linked-Notes, or ELNs.

Here's an example for ELN, a $1,000 5-year equity-linked note could be structured to use $800 of the fund to buy a 5-year strip bond with a 4.5% yield-to-maturity and then invest and reinvest the other $200 in call options for the S&P 500 over the 5-year life of the note. There is a chance that the options will expire worthless, in which case the investor gets back the $1,000 initially put in. If, however, the options appreciate in value with the S&P 500, those returns are added to the $1,000 that will eventually be returned to the investor.

The 1 year performance is - 13.3%, not too bad as compared to S&P500 which is -18.9%. If u add in the monthly dividend (~$6.02 in 1 year which is equivalent to almost 11% dividend yield), the performance for the last 1 year is quite acceptable not forgetting the potential upside when market starts to rally!

Unlike other covered call ETFs that provides monthly dividend like $Global X S&P 500 Covered Call ETF(XYLD)$  $NASDAQ 100 Covered Call ETF(QYLD)$  $Global X Russell 2000 Covered Call ETF(RYLD)$  , JEPI perform significantly better in today's highly volatile market. Some potential risks of such covered call ETFs include missing out on stock appreciation in exchange for the premium. A covered call will limit the upside potential, but does not prevent the portfolio from losing value in a down market.

Will you add this to your watchlist? Do let me know your opinion!

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