Introduction to JEPI and JEPQ
There are several reasons why I love having JEPQ and JEPI in my Roth IRA account. Firstly, these investments offer a diverse range of options that allow me to customize my portfolio according to my risk tolerance and investment goals. Additionally, both JEPQ and JEPI have consistently shown strong performance over the years, providing me with potential long-term growth and income opportunities. I am confident that these investments will help me achieve my financial objectives and secure my financial future. I am excited to see the potential returns they can generate for my portfolio.
| JEPI Total Return 2023 | JEPQ Total Return 2023 |
| 7.87% | 26.22% |
Now let me dive a little deeper into each of these investment opportunities and assess their potential for long-term growth and income. I will evaluate their risk-reward profiles and assess their suitability for my investment strategy. I will also consider their liquidity and diversification potential. I will determine the best investment mix to achieve my financial goals. Based on your Roth IRA goals, you can decide if JEPQ and JEPI are good investments.
JEPI and JEPQ Difference
JEPI is an actively managed fund that invests in S&P 500 stocks that are low-volatility and have value characteristics. JEPI generates income by selling options on these stocks. JEPI is more diversified than JEPQ, with more holdings and more balanced industry weights. JEPI also tends to experience lower volatility than JEPQ.
On the contrary, JEPQ ETF sells call options on the Nasdaq 100 Index to deliver monthly income. JEPQ is more top-heavy in terms of the top 10 positions and the technology sector overall. JEPQ also has a larger dividend yield than JEPI, at 11.9%.
How do JEPI and JEPQ generate high dividends?
JEPI and JEPQ stand as testaments to the power of covered-call strategies in generating high income, providing investors with intriguing options in the ever-evolving landscape of ETF investing. These strategies can be particularly appealing to investors seeking consistent income streams.
JEPI and JEPQ investment opportunities
I see JEPI and JEPQ as decent hedges for my overall Roth IRA account. I mainly hold stocks of growth companies and some blue-chip companies in my Roth IRA. Most of my picks are doing well, but dividend-paying stocks and ETFs have always been my favorites. I want to hold JEPI and JEPQ in my Roth IRA because the high dividends that I get in the Roth IRA are going to be tax-free dollars. Until I turn 59.5 years old, these high dividends can have a snowball effect and increase my returns. Did I mention that everything will be tax-free?
JEPI and JEPQ pay monthly dividends.
JEPI and JEPQ have a 0.35% expense ratio.
JEPQ has an annual yield of over 10%. (As of December 2023)
JEPI has a yield of 8.48%. (As of December 2023)
Risk-Rewards for JEPI and JEPQ
The risk-reward ratio of JEPI and JEPQ is favorable, offering potential for higher returns with a manageable level of risk. For example, in a bull market, you might not see JEPQ outperform QQQ (or any NASDAQ 100 index fund), but in a bear market, when a correction happens in the stock market, JEPQ is likely to outperform QQQ.
QQQ has a year-to-date total return of 40.4%, while JEPQ’s total return for 2023 is 24.9%, surpassing JEPQ by a large margin. QQQ has also outperformed JEPQ over the last year, with a total return of 26.4% vs. 16.4% for JEPQ. Investors who are looking for higher potential returns may find QQQ to be a more attractive option based on its strong performance. However, in a bear market, when QQQ falls below 20%, you are more than likely to see JEPQ outperforming QQQ. This is because of the simple out-of-the-money covered calls, which will expire worthless, and JEPQ managers will get to keep the premium they collect for selling covered calls.
Summary (I Like Both JEPI and JEPQ – But JEPQ Is my Favorite)
JEPQ, JPMorgan’s covered-call ETF, emerges as a compelling choice for investors eyeing consistent income within their Roth IRA. With a unique twist utilizing the Nasdaq 100 as its investment universe, JEPQ sets itself apart. Launched in May 2022, it has quickly gained favor among investors, boasting an impressive 11.9% dividend yield. Although smaller in assets compared to JEPI, its older counterpart, JEPQ’s focused approach and higher yield make it a standout option. Sharing the same experienced team of portfolio managers and maintaining a competitive 0.35% expense ratio, JEPQ combines innovation with a commitment to generating high income, making it a favored choice for those seeking a dynamic addition to their Roth IRA portfolio.
