Today’s video will focus on how to use JEPI – The JP Morgan Equity Premium Income ETF – in a portfolio.
Unlike most investment channels, this one is run by two EXPERIENCED investment professionals who used to show Portfolio Managers at Merrill Lynch and Morgan Stanley how to evaluate funds and build portfolios. Today, I’m going to show YOU how to do that with JEPI.
We’ll start with a brief overview of what JEPI is and how it’s managed, then get into how it can be expected to perform in different market environments, which kinds of investors should… and should NOT consider it, and how it can compliment other strategies in an investor’s portfolio. Let’s dive in.
At its most basic level, JEPI is a U.S. equity covered call ETF.
What’s a covered call ETF? In a nutshell, it buys stocks, then writes, or sells, call options on them.
A call option gives the buyer the right to buy a stock at a set price. Of course, they’d only want to do that if the stock goes HIGHER than that price. So, if you’re SELLING those options, like JEPI is, that means SOMEONE ELSE gets to benefit from the upside in the stocks if they go up a lot.
So to recap, JEPI buys stocks, then sells call options on them. That means you get A LITTLE of the upside potential, but then anything beyond that set price, which is called the strike price, you give up. And what do you get for giving up your upside potential? A juicy yield, and THAT is the main reason people buy ETFs like JEPI. Right now, it’s yielding almost 8%.
Now that you’ve got the basics down, let’s dive a little deeper into how JEPI is managed, since it differs from the typical covered call ETF in a few important ways.
First of all, JEPI is actively managed. It starts with the stocks in the S&P 500, but rather than try to mimic the index, the portfolio managers basically try to create a lower-risk version of it.
That’s important, because if you’re going to give up the upside potential, you want to also be protected on the downside.
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0:00 Intro
00:37 JEPI basics
1:22 How JEPI is managed
2:07 JEPI vs S&P 500 in down markets
2:28 JEPI vs bonds
3:21 JEPI in down markets
6:11 JEPI in the long run
7:04 Paradox of covered call ETFs
8:10 JEPI for young investors
8:29 JEPI in an IRA
8:54 JEPI for retirees
10:05 My preferred retirement income approach
#fundamentalsoffinance #jepi
