Updated: Aug 27
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
QYLD's Approach: Tracks NASDAQ-100 and sells covered call options
JEPI's Approach: Focuses on S&P 500 low-volatility, value stocks, and sells options
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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