If you're looking for a covered call ETF to track the S&P 500 Index, JEPI may be a good choice. This type of ETF generates income from selling options on U.S. large cap stocks. JEPI also considers ESG criteria when deciding which companies to include in the fund. Read on to learn about JEPI and whether it's right for you. In this article, we'll discuss the ESG criteria and whether or not JEPI is a good choice.
JEPI is a covered call ETF for the S&P 500 Index
JEPI is an income ETF that holds high-yield stocks and sells covered calls. Its investment strategy uses proprietary research methods to find high-quality, low-volatility stocks. JEPI's objective is to generate a significant portion of the S&P 500's returns. Its portfolio consists of approximately 100 stocks, with a relatively equal weighting.
While the JEPI has lost 11% of its value over the past year, it is still holding up very well compared to the S&P 500, which has fallen about 4% over the same period. Another advantage of using a covered call strategy is the ability to limit the upside while ensuring steady monthly income. JEPI has a yield of 8.0% over the past twelve months, which is better than the S&P 500's 7.5% decline over the same period.
Although covered call ETFs have not completely avoided all the stock losses this year, they have managed to limit their losses to seven to 10 percent. This is an excellent risk/reward ratio for a market in this condition. Covered call ETFs have outperformed the broader market by four to seven percentage points during the same period. The JEPI has a low volatility, which makes it a great tool to ride out the riskier periods.
Unlike most ETFs, JEPI is perpetually closed-end and follows the S&P 500 Index. This means that if QQQ drops by six points, you'll earn a 20% premium. And if you sell the call at $13, you'll keep the underlying stock. If QQQ drops by six percent, you'll get $26.
Despite being a relatively new investment strategy, covered calls have a long and controversial history. They were first made popular in the 1980s when many investors were attracted to the promise of high incomes and modest gains in the stock market. In addition to becoming popular, covered call strategies generated significant amounts of fees and commissions. But then came the roaring bull market of 1982. The long stock position with short options was unable to keep up with the soaring stock market.
Another ETF with covered calls is JEPI. It is comprised of 45 closed-end funds that trade more like stocks. They use debt to leverage their assets. Its current lineup of holdings includes tactical funds like MainStay CBRE Global Infrastructure Megatrends Fund. This ETF is a great option for traders looking for income. Its low 5-year return makes it a great option for income investors.
JEPI has many advantages. The company's strategy is similar to that of XYLD. Both ETFs employ covered call writing strategies across their portfolio. JEPI will write options with strikes above the current S&P 500 prices. Unlike XYLD, PBP uses a wider range of options, enabling it to capture higher share price returns over the past couple of years.
It generates income by selling options on U.S. large cap stocks
The JEPI Stock earns an income stream by selling options on U.S. large cap stocks. The fund aims to generate a monthly income stream from associated premiums and stock dividends. It is an actively managed fund that combines the characteristics of a covered call ETF and a large cap low volatility ETF. JEPI has been around for nearly two decades, and its dividends are paid out monthly.
JEPI Stock charges a low net expense ratio, making it a good choice for investors who don't want to take on the risk of a high-fee hedge fund. However, if you aren't comfortable with this level of volatility, you may want to invest in other funds instead. JEPI has been increasing its dividend every month since its inception and is currently yielding more than 7%.
JEPI offers investors a solution to the problem of generating income from investing in higher-yielding markets. Currently, income investors must choose between holding cash in an account or investing in higher-yielding stocks that carry higher risk and liquidity. JEPI allows investors to generate a steady monthly income stream while avoiding these risks and reducing tax burdens. The benchmark 10-year Treasury note yield has fallen to 1.25% recently, after rising above 1.8% during the height of the inflation fear selling. But in recent months, yields have been falling due to increased risk-off hedging and economic forecasting.
The JEPI Stock generates income by selling option contracts on U.S. large cap stocks. It invests in low-volatility stocks and sells options on them to generate income. Although it is new in the market, it will likely be more volatile than the market as a whole. However, it does not risk missing out on full gains because it is a bet on the manager's ability to outperform the market.
JEPI has lost 7.2% over the past year, and 11.4% in the first half of 2017. However, it is composed of high quality names, and its covered call strategy should continue to produce monthly income. However, investors who are contrarian should avoid covered calls. It is important to note that the JEPI is not a high-risk fund, so be sure to read the disclosure policy before investing.
JEPI from JPMorgan allocates 80% of its assets to equity securities and 20% to ELNs, which combine the economic characteristics of the S&P 500 Index with written call options. The JEPI fund then sells options on these large cap stocks and collects premiums on those options. These options generate reoccurring income, which is then distributed to shareholders every month.