FTHI vs PEPS

FTHIBFirst Trust BuyWrite Income ETF

PEPSBParametric Equity Plus ETF

In short

FTHI One of the original covered call income ETFs (2014): an actively picked US stock portfolio with S&P 500 calls sold over the top on 25% to 75% of the fund, so part of the upside stays unsold. Pays monthly.

PEPS Active management at index-fund pricing. PEPS holds a U.S. large-cap base, then writes S&P 500 calls against offsetting long exposure: a beta-neutral overlay built to add return rather than swap upside for income.

Stated mandate

FTHI The Fund seeks current income and, secondarily, capital appreciation. It invests in U.S.-listed equities across market capitalizations and writes covered call options on the S&P 500 Index to generate additional cash flow.

PEPS The Fund seeks long-term capital appreciation. It is actively managed, using a U.S. large-cap equity base and beta-neutral call overwriting on the S&P 500 with offsetting long exposure to seek incremental total return.

Why people hold it

• FTHI The overlay is a dial, not a switch. The prospectus sets call notional generally between 25% and 75% of the fund, so managers can sell less premium and leave more equity upside open.sec.gov
• Underneath the options sits a real stock portfolio, roughly 190 US-listed names across market caps chosen by the manager, not a copy of the index it writes calls on.ftportfolios.com
• Calls are laddered across expirations under one year, struck at-the-money to slightly out-of-the-money, and premiums feed a monthly distribution.sec.gov
• Live since January 2014, well before the derivative income boom, and now a multi-billion-dollar fund that trades actively. One of the stronger builds in a crowded S&P 500 income group.

• PEPS 0.10% is index-fund pricing for an actively managed strategy. Even the cheap, well-regarded active peers cost more: DFAU at 0.12%, FELC at 0.18%.
• Not a covered-call fund. The sold S&P 500 calls are paired with offsetting long exposure, so the overlay seeks incremental total return instead of capping upside.
• Ordinary 1940 Act ETF wrapper, U.S. large-cap equity, distributions paid quarterly. The complexity lives in the overlay, not the tax paperwork.
• Cost is the standout: the typical active U.S. equity ETF in this group charges several times what PEPS does, and fee drag is the one input you know in advance.

Worth knowing

• FTHI At 0.75% a year it sits above the 0.60% typical for its peer group, and index-rules rivals like IVVW (0.25%) and GPIX (0.35%) charge far less for S&P 500 call income.
• The calls are on the S&P 500 while the stock sleeve is its own selection, so the two can drift apart. The prospectus notes those index calls are technically uncovered.sec.gov
• Selling calls trades away part of a rally for cash today, and the filings flag active trading that can push portfolio turnover past 100% a year.sec.gov

• PEPS Launched in November 2024. The overlay has not yet run through a full market cycle, so there is limited history to judge it on.
• A small, thinly traded fund. Bid-ask spreads can run wider than a mega-cap index ETF's, which shows up most on larger orders.
• The options leg adds moving parts: short index calls lose value in a sharp rally, and the offsetting long exposure is what has to make that back.

Full FTHI profile⁠

Full PEPS profile⁠