From 24/7 Wall St. · Ryne Mauck · · 1m
JEPQ Lags Nasdaq-100 by $17,970
JEPQ's monthly income strategy costs retirees $17,970 over a year versus Nasdaq-100.
In brief
JEPQ's monthly income strategy costs retirees $17,970 over a year versus Nasdaq-100. Retirees investing $300,000 in JEPQ lose $17,970 annually versus Nasdaq-100 due to covered calls. Originally reported by 24/7 Wall St..
Retirees' $300,000 Investment
A retiree invested $300,000 in JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) a year ago.
JEPQ's Total Value After Year
JEPQ's value grew to $359,160 including all monthly distributions.
Nasdaq-100 Index Fund Growth
The Nasdaq-100 index fund (QQQM) grew to $377,130 on the same investment.
The $17,970 Gap
JEPQ trailed the Nasdaq-100 by $17,970 over one year due to covered calls.
Why the Gap Exists
JEPQ sells part of its Nasdaq-100 upside to generate monthly income, costing growth.
Market Impact of Strategy
In a rising market, JEPQ lags the index by 5.99 percentage points annually.
What Retirees Should Do
Retirees should compare JEPQ against QQQM on a dividend-adjusted basis before investing.
The essence
Retirees investing $300,000 in JEPQ lose $17,970 annually versus Nasdaq-100 due to covered calls.
