JEPI vs JEPQ: Which High-Income ETF Fits Your Portfolio?

In today’s low-yield environment, income-focused investors are increasingly turning to covered call ETFs for reliable cash flow. Two of the most talked-about options are JPMorgan Equity Premium Income ETF (JEPI) and JPMorgan Nasdaq Equity Premium Income ETF (JEPQ). Both promise monthly dividends and downside protection, but their strategies and risk profiles differ dramatically. Let’s break down which ETF might suit your goals.

The Basics: What Are JEPI and JEPQ?

• JEPI (launched May 2020): Targets the S&P 500, using a mix of equities and equity-linked notes (ELNs) to sell covered calls on large/mid-cap U.S. companies.

• JEPQ (launched May 2022): Focuses on the Nasdaq 100, employing a similar covered call strategy but concentrated on tech giants like Apple, Microsoft, and Nvidia.

Both charge 0.35% expense ratios and aim to deliver monthly income while limiting downside risk through options strategies.

Key Differences at a Glance

Why JEPI Stands Out

1. Diversification: With exposure to all 11 S&P 500 sectors, JEPI acts as a “whole market” stabilizer.

2. Lower Volatility: Its ELN structure smooths returns, making it ideal for retirees or cautious investors.

3. Proven Track Record: Survived the 2022 bear market with a -13.71% max drawdown vs. S&P 500’s -25%.

Example Holding: JEPI’s top positions include healthcare giant UnitedHealth and consumer staple Procter & Gamble.

The Case for JEPQ

1. Higher Yield: Nasdaq’s volatility allows JEPQ to generate more call premium, translating to juicier dividends.

2. Tech Growth Potential: Offers exposure to AI leaders like NVIDIA and cloud titans like Amazon.

3. Rebound Power: In bull markets, JEPQ’s tech focus could outperform (e.g., +40% Nasdaq rally in 2023).

Caveat: JEPQ’s -20% max drawdown in 2022 highlights its risk during tech selloffs.

Performance Head-to-Head

• 2023 Returns: JEPQ (+18% total return) edged out JEPI (+9%) during the tech rally.

• 2024: JEPI (10.62%) outperformed JEPQ (9.66%) amid rising rates and choppy tech markets.

• Dividend Consistency: JEPI’s payouts fluctuate less (8-10% annualized), while JEPQ’s range wider (10-15%).

Who Should Buy Which?

• Choose JEPI If:

  • You prioritize stability over maximum yield.

  • You want diversification beyond tech.

  • You’re a retiree needing predictable income.

• Choose JEPQ If:

  • You’re bullish on tech innovation (AI, cloud computing).

  • You can tolerate higher volatility for extra yield.

  • You’re under 50 and want growth + income.

Expert Tips for Investors

1. Hedge Your Bets: Pair JEPI (60%) with JEPQ (40%) to balance yield and sector exposure.

2. Monitor Fed Policy: Rising rates hurt tech stocks—shift to JEPI during hawkish cycles.

3. Reinvest Dividends: Use DRIPs to compound returns, especially in JEPQ’s growth-heavy portfolio.

The Bottom Line

JEPI is the steady, diversified workhorse for conservative income seekers. JEPQ is the turbocharged option for tech enthusiasts willing to ride volatility. Your choice hinges on one question: How much tech exposure can you stomach for extra yield?

Disclaimer: This is not financial advice. Covered call ETFs may underperform in raging bull markets. Always consult a financial advisor.