Meet an ETF That's Heavily Invested in Nvidia and -- Believe It or Not -- Offers an Ultra-High Yield of 11.3%
Key Points
The JPMorgan Nasdaq Equity Premium Income ETF uses options to create income from Nasdaq stocks.
Nvidia makes up nearly 9% of the fund's assets.
While covered call ETFs aren't right for everyone, this one could be worth a look for income investors.
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It's no secret that Nvidia (NASDAQ: NVDA) and other top-tier tech stocks are extremely popular right now, and for good reason. The artificial intelligence investment boom has resulted in soaring revenue for the tech giants, and there could be much more to come.
However, one problem is that the mega-cap tech companies aren't exactly high-income stocks. Some (including Nvidia) pay small dividends, but for retired investors or others who need income from their investments, it isn't likely to be enough.
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Image source: Nvidia.
That's where the JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ: JEPQ) comes in. This unique Nasdaq-100 ETF is designed to not only give investors exposure to Nvidia and other mega-cap tech companies, but to produce a high dividend yield at the same time.
About the JPMorgan Nasdaq Equity Premium Income ETF
The JPMorgan Nasdaq Equity Premium Income ETF, at its core, is a Nasdaq-100 index fund. It owns the same stocks that make up the tech-heavy benchmark index, and as a result, has a high concentration of Nvidia stock. In fact, Nvidia is the top holding and makes up 8.8% of the portfolio.
The rest of the fund's portfolio looks like you'd expect a Nasdaq-100 index fund to look like, with the rest of the mega-cap tech stocks making up a large portion of assets.
|
Company (Symbol) |
Concentration |
|---|---|
|
Nvidia (NASDAQ: NVDA) |
8.8% |
|
Microsoft (NASDAQ: MSFT) |
7.3% |
|
Apple (NASDAQ: AAPL) |
7.2% |
|
Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) |
4.8% |
|
Amazon.com (NASDAQ: AMZN) |
4.6% |
|
Broadcom (NASDAQ: AVGO) |
4.6% |
|
Meta Platforms (NASDAQ: META) |
3.3% |
|
Tesla (NASDAQ: TSLA) |
2.9% |
|
Netflix (NASDAQ: NFLX) |
2.6% |
|
Costco (NASDAQ: COST) |
1.4% |
|
Concentration in 10 largest holdings |
47.5% |
Data Source: JPMorgan Chase. Holdings as of September 30, 2025.
One big twist
Having said all of that, the JPMorgan Nasdaq Equity Premium Income ETF isn't like other Nasdaq-100 index funds. There's one big difference that allows it to pay such a high dividend yield.
Here's the most important point. The JPMorgan Nasdaq Equity Premium Income ETF uses options -- specifically selling covered calls on its holdings -- to generate income and lower volatility.
If you aren't familiar with covered calls, that's ok. But the main idea is that selling call options against stocks you own gives someone else the right to buy your shares at a predetermined price before a predetermined expiration date, in exchange for an upfront premium payment. Each time your call options expire, you can repeat the process and generate an additional upfront payment.
This is a bit of an oversimplification, but it's the basic idea behind how this actively managed ETF works. And the fund passes the options premiums collected along to investors in the form of dividends.
Because of this, the JPMorgan Nasdaq Equity Premium Income ETF has been able to deliver an 11.3% dividend yield over the past 12 months.
It's not right for everybody
Before investing in a covered call ETF like this one, there are a few things to be aware of.
Most importantly, there's no such thing as free money without risk. And when you sell covered calls, the key trade-off is that you're giving up some of your upside potential in exchange for the options premium you receive. This means that if the Nasdaq-100 rockets higher in a short period, this ETF isn't likely to match the performance.
As a real-world example, the Nasdaq-100 soared by 15% from May through July of this year. The JPMorgan Nasdaq Equity Premium Income ETF gained just 5.3% during that same period, as the options strategies effectively caped its gains.
Additionally, the JPMorgan Nasdaq Equity Premium Income ETF has a 0.35% expense ratio, which isn't exactly high, but is significantly more than you'll pay for one of the major Nasdaq-100 index funds in the market.
With that in mind, the JPMorgan Nasdaq Equity Premium Income ETF can certainly be a good way to get exposure to the tech-heavy Nasdaq while producing a high income stream and mitigating your risk of loss. But it's important to know exactly what you're getting into first.
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Matt Frankel has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Costco Wholesale, Meta Platforms, Microsoft, Netflix, Nvidia, and Tesla. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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