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QYLD vs. JEPI: Analyzing Two High-Yield ETFs

Updated: 5 days ago

Exploring QYLD and JEPI ETFs

QYLD and JEPI are both exchange-traded funds (ETFs) that offer investors the opportunity to generate income through dividends and option premiums.

QYLD, the Global X NASDAQ-100 Covered Call ETF, is a passively managed fund that tracks the performance of the CBOE NASDAQ-100 Buy Write V2 Index. Its strategy involves selling covered call options on the NASDAQ-100 Index to enhance income.

JEPI, on the other hand, is the JPMorgan Equity Premium Income ETF—an actively managed fund that targets S&P 500 stocks exhibiting low-volatility and value characteristics. Additionally, JEPI sells options on these stocks to generate an income stream for its investors.

Investment Strategies and Indexes

Cost and Income Considerations

When comparing the two ETFs, investors should consider the following key metrics:

  • Expense Ratios: QYLD has a higher expense ratio (0.60%) compared to JEPI's lower expense ratio (0.35%).

  • Dividend Yields: QYLD's trailing twelve months dividend yield is around 14.61%, while JEPI's yield stands at 9.38%.

  • QYLD Historical Average Yield: 11.3%

  • JEPI Historical Average Yield: 7.75%

Performance and Risk Assessment

Since May 2021, JEPI has outperformed QYLD with a total return of 44%, compared to QYLD's return of 19%. A closer look at risk and volatility metrics reveals:

  • Sharpe Ratios: QYLD has a lower Sharpe Ratio of -0.32, indicating higher risk relative to return, compared to JEPI's Sharpe Ratio of -0.06.

  • Correlation: The two ETFs have a moderate correlation of 0.67, suggesting potential diversification benefits.

  • Volatility: QYLD's volatility is lower (0.99%) than JEPI's (1.87%), indicating smaller price fluctuations.

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With its intuitive and user-friendly interface, TradingView allows investors to seamlessly compare the total returns of two ETFs over different timeframes, which is extremely helpful for dividend-focused ETFs.

Making an Informed Choice

Both QYLD and JEPI present unique opportunities for investors seeking income and diversification. QYLD's strategy of selling covered call options on the NASDAQ-100 Index may appeal to investors who seek higher dividend yields and exposure to the technology sector. JEPI's focus on low-volatility, value stocks in the S&P 500, combined with option selling, makes it a strong contender for risk-conscious investors.

As with any investment, individuals should conduct thorough research and consider their risk tolerance and investment goals before making a decision. Both QYLD and JEPI have shown strong performance, but each has unique characteristics that may align differently with investors' preferences.

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