In terms of total return and inflows, the JPMorgan Nasdaq Equity premium Income ETF (JEPQ), is performing well in this year. Investors continued to seek out its high yield, bringing in more than $3.5 billion. In January, it brought in $1.6 billion. Then $1.3 billion followed by $634 million over the following two months.
JEPQ ETF also has a superior performance when compared with the Nasdaq index. Invesco’s QQQ index (QQQ), which has a negative return of 6%, is 4.78% worse. Is JEPQ an investment that is worth considering as the volatility of the stock market increases?
What is JEPQ ETF?
JEPQ ETF, with assets of over $23 billion, is the largest covered call ETF on Wall Street.
It helps investors access the Nasdaq 100 Index and achieve superior returns.
Investors in the JEPQ ETF receive about 10,7% of annual dividends. These are paid out monthly. The 10% rate is significant, considering the fact that today’s risk-free 10% rate is less than 4.5%.
JEPQ ETF returns are generated in two different ways. The ETF receives dividends paid by the companies in whose portfolio it invested. The fund also makes money by using covered calls.
A covered call involves an investor buying an asset, and selling call options on that asset. The JEPQ ETF, in this instance, sells Nasdaq 100 call options, which are popular names that track the largest technology companies of the US. The fund gets a payment for writing the strategy and distributes it to its investors.
Find out if JEPQ and JEPI are good investments for 2025.
Why invest in JEPQ
There are several reasons that investing in JEPQ is a good idea for most investors. The fund pays out monthly dividends. These returns were historically better than fixed assets such as bonds and money-market funds. The fund can be seen as an alternative to money market funds and fixed assets.
The index also tracks companies that are the most forward-looking in the US. These include companies such as NVIDIA and Microsoft that are known for their success. They have made investments in the industries which will be dominant for future technology.
JEPQ is also seen by many as being a superior ETF to the QQQ or other ETFs with a lower yield. If you have invested in QQQ you may want to consider allocating some of your capital into the JEPQ Fund for higher returns.
The ETF and QQQ ETF have a strong correlation, particularly when it comes to the return on investment. The JEPQ ETF had a total return of 41% in the past three years, whereas the QQQ only returned 39%.
This year, the JEPQ total return has been minus 4,8% as compared with QQQ’s 5,9%. The fund is likely to continue performing well in the future, particularly when this current correction stops.
JEPQ ETF is at an all time high. Three catalysts are worth watching.
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