Even counting the checks, JPMorgan's income funds trailed the stock funds
JPMorgan Nasdaq Equity Premium Income ETF returned 19.9% in the year through Friday, October 2, 4.9 percentage points behind a Nasdaq-100 fund, and JPMorgan Equity Premium Income ETF returned 6.9%, 9.5 percentage points behind an S&P 500 fund.
Key takeaways
JPMorgan will pay two of its income funds on Monday, October 5. Add back the checks from the year through Friday, October 2, and one holder still trailed a Nasdaq-100 fund, the other an S&P 500 fund.
JPMorgan Nasdaq Equity Premium Income ETF, JEPQ, a $44.5 billion fund, holds Nasdaq-100 stocks and sells call options on that index to help fund a monthly payment. Monday's check is $0.56687 a share. The ex-dividend date, the day the shares started trading without this payment, was Thursday, October 1.
That check is 17% below September's, but 27% above last October's, and the past twelve payments are 15% above the twelve before them. August and September were the two highest of those twelve, so October stepped down from a high month.
JPMorgan Equity Premium Income ETF, JEPI, a $45.3 billion fund, holds large U.S. stocks and sells call options against the S&P 500. Monday's check is $0.34134 a share, 5.5% below last October's and 8.1% below September's. The past twelve payments are 3.9% below the twelve before them.
JPMorgan says the checks, which change from month to month, come from stock dividends and from option premiums, and that holders may give up some of the market's rise in exchange for that premium. A quieter market, the firm says, may produce less of it.
What the holder kept
On Friday, October 2, JEPQ closed at $61.04. The last twelve checks equaled 11.3% of that price, and paying Monday's amount twelve times would come to 11.1% of it, so the smaller October check left the rate almost where it was.
A holder who reinvested every check was up 19.9% over that year. Spend the checks, and what remains is the share price, up 6.7%. A fund that tracks the Nasdaq-100, QQQ, returned 24.8% over the same stretch, 4.9 percentage points more than the holder who reinvested.
Here the income rate did slip. JEPI closed at $56.10 that Friday. The last twelve checks equaled 8.1% of that price, and repeating Monday's payment for a year would come to 7.3% of it.
Spend the checks, which is what living on the income means, and the share price is down 1.3% over that same year. Reinvest them and the holder was up 6.9%. A fund that tracks the S&P 500, SPY, returned 16.4%, 9.5 percentage points more than the holder who reinvested.
Reinvested checks still left both funds behind
- Price only
- Reinvested
- Stock fund
- JEPQ
- Price only +6.7%
- Reinvested +20%
- Stock fund +25%
- JEPI
- Price only −1.3%
- Reinvested +6.9%
- Stock fund +16%
ETFs in this story
Frequently asked questions
How much are the October checks from JEPQ and JEPI?
JEPQ pays $0.56687 a share and JEPI pays $0.34134 a share on Monday, October 5, and the shares started trading without the payment on Thursday, October 1.
How did JEPQ compare with a Nasdaq-100 fund over the past year?
With checks reinvested, JEPQ returned 19.9% in the year through October 2, while QQQ returned 24.8%, so JEPQ was 4.9 percentage points behind.
How did JEPI compare with an S&P 500 fund over the past year?
With checks reinvested, JEPI returned 6.9%, while SPY returned 16.4%, so JEPI was 9.5 percentage points behind, and its share price alone fell 1.3%.
Where do the monthly checks come from?
JPMorgan says the checks come from stock dividends and from premiums for selling call options, and that a quieter market may bring in less premium.
