JEPI vs JEPQ: Comparing Returns and Stability
Many investors are seeking stable monthly dividend income these days.
Today, let’s take a deep dive into JEPI and JEPQ, two popular monthly dividend ETFs from JPMorgan.
These ETFs each have unique characteristics, so a smart choice depends on your investment goals and preferences.
In this post, we’ll compare their returns, stability, portfolio composition, and investment strategies to help you decide which ETF suits you best.
JEPI: Ideal for Stability-Focused Investors
JEPI stands for JPMorgan Equity Premium Income ETF. It prioritizes stability and provides monthly dividend income.
1. Portfolio Composition
- Primarily based on S&P 500 index stocks.
- Employs a covered call strategy to generate stable premium income.
- Features lower volatility compared to traditional stock investments.
2. Returns
- Dividend yield over the past 12 months: 7–11%.
- Consistent dividends and steady total returns.
3. Stability
- Designed to minimize volatility and perform defensively during market downturns.
- Ideal for conservative investors or those approaching retirement.
JEPQ: Balancing Growth and Dividends for Risk-Tolerant Investors
JEPQ stands for JPMorgan Nasdaq Equity Premium Income ETF. It focuses on tech-heavy portfolios while offering monthly dividends.
1. Portfolio Composition
- Composed mainly of Nasdaq 100 index technology stocks.
- Like JEPI, it uses a covered call strategy but has a higher allocation to growth stocks, increasing volatility.
2. Returns
- Dividend yield: 10–14%, higher than JEPI.
- Portfolio centered on high-growth potential tech stocks, with significant upside potential.
3. Stability
- More sensitive to market fluctuations due to tech stock exposure.
- Suited for aggressive investors seeking high yields and growth.
JEPI vs JEPQ: Key Comparison Table
| Aspect | JEPI | JEPQ |
|---|---|---|
| Portfolio | S&P 500-based | Nasdaq 100-based |
| Dividend Yield | 7–11% | 10–14% |
| Expense Ratio | 0.35% | 0.35% |
| Volatility | Low | High |
| Growth Potential | Moderate | High |
| Strategy | Stable dividends, low volatility | High dividends, growth potential |
Both JEPI and JEPQ maintain a low 0.35% expense ratio.
While JEPI emphasizes stability, JEPQ focuses on growth potential.
Although JEPQ offers a higher dividend yield, it comes with greater volatility.
Performance Summary Since Launch
JEPI Performance Since Launch (May 2020)
| Year | Total Return (%) | Dividend Yield (%) | Volatility (%) | Key Events |
|---|---|---|---|---|
| 2020 | 5.8 | 8.5 | 12.3 | Benefited from market rebound |
| 2021 | 21.3 | 7.9 | 9.2 | Stable growth maintained |
| 2022 | -3.5 | 10.1 | 11.5 | Defensive performance in downturn |
| 2023 | 13.7 | 8.8 | 10.3 | Increased covered call premiums |
JEPQ Performance Since Launch (May 2022)
| Year | Total Return (%) | Dividend Yield (%) | Volatility (%) | Key Events |
|---|---|---|---|---|
| 2022 | -12.4 | 12.8 | 16.8 | Tech sector weakness |
| 2023 | 24.6 | 11.5 | 14.9 | Tech rebound and high returns |
JEPI has demonstrated stable performance since its launch, particularly excelling during the market downturn in 2022.
JEPQ faced challenges due to the weakness in tech stocks shortly after its launch but recorded a significant rebound in 2023.
While JEPI offers relatively lower volatility, JEPQ presents higher volatility alongside greater return potential.
Capturing Both Stability and Growth
Comparing JEPI and JEPQ showcases their distinct features, but there’s no rule that says you must choose only one.
Let’s explore how combining these ETFs or diversifying with others can enhance your portfolio.
1. JEPI + JEPQ Synergy Strategy
By strategically allocating funds to both ETFs, you can capture stability and growth potential simultaneously.
- JEPI: Defensive support during market downturns.
- JEPQ: Exposure to high-growth tech stocks.
2. Recommended Portfolio Combinations
To strengthen your portfolio, consider pairing these ETFs with others like:
- SCHD: Foundation for stable high-dividend stocks.
- VIG: A long-term strategy focusing on dividend growth.
Practical Investment Tips
-
Adjust Allocation
- A 70% JEPQ and 30% JEPI allocation has outperformed the S&P 500 in recent studies.
- Tailor allocations based on your risk tolerance.
-
Mind Expense Ratios
- Both ETFs have an identical 0.35% expense ratio, ensuring cost-effectiveness for long-term investments.
Final Thoughts: Your Choice
JEPI and JEPQ are excellent options tailored to different types of investors.
Choose JEPI if you value stability and steady income, or opt for JEPQ if you prioritize high yields and growth potential.
Ultimately, the right choice depends on your financial goals and risk tolerance.
For many, a balanced portfolio including both ETFs may be the best strategy.