Could Buying JPMorgan Equity Premium Income ETF Today Set You Up for Life?

Source The Motley Fool

Some funds look weak at first glance. Then you click the little checkbox that enables a dividend reinvestment plan (DRIP), and the droopy fund springs to life. Those quarterly cash distributions can be game-changers in the long run when you reinvest them.

Make your investments work smarter, not harder

That's how it works with the JPMorgan Equity Premium Income ETF (NYSEMKT: JEPI). If you just buy this exchange-traded fund (ETF) and hold it without taking the next step, you'll fall behind simple market trackers like the Vanguard S&P 500 ETF (NYSEMKT: VOO) very quickly:

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

JEPI Total Return Price Chart

JEPI Total Return Price data by YCharts

The same fund works much better when you automatically reinvest the dividend-style cash distributions into more shares of the same ETF. This ETF nearly catches up to the popular S&P 500 tracker when you measure performance by total returns instead:

JEPI Total Return Price Chart

JEPI Total Return Price data by YCharts

What is this ETF, anyway?

The Equity Premium Income ETF is a pretty unique fund.

As the "equity" part of the name suggests, the portfolio is based on stocks. More specifically, it's a diversified list of about 110 large-cap stocks, led by financial giants Visa (NYSE: V), MasterCard (NYSE: MA), and Progressive (NYSE: PGR).

Then there's the "premium income" part. The fund managers at JPMorgan use an undisclosed structure of stock options to generate additional dividend-like cash payments from those stable stocks. In other words, these options provide extra "income" through option-based "premiums."

With $39.6 billion of assets under management, this is the most popular actively managed ETF on the market today. It charges annual fees of 0.35%, which is a lot next to the forgettable 0.03% charged by the passively managed Vanguard S&P 500 ETF.

But the Equity Premium Income ETF team earns its fees by generating a robust income stream. The current yield is 7.4%, and the average value since the ETF's inception in May 2020 is 8.7%. The average yield of the stock components is a modest 1%, with stock-specific yields ranging from zero to a single ticker just above the 7% mark.

It's not easy to squeeze a reliable 7.4% yield out of more than a hundred lower-yield stock tickers. This Premium Income ETF is hard to beat if you're looking for a stable and secure source of high dividend yields.

Building wealth with less market drama

So the Equity Premium Income ETF can deliver respectable total returns in the long haul. When the time is right, you can switch off the DRIP function to collect dividend payouts instead of boosting the ETF's overall returns. And the focus on large-cap stocks, with an active team of human analysts steering the portfolio, also keeps the volatility low.

Many investors simply stock up on broad market trackers like the Vanguard S&P 500 ETF and never worry about buying individual stocks. This is an excellent strategy that's very likely to grow your wealth over several decades. Doing the same thing with the JPMorgan Equity Premium Income ETF may result in somewhat lower returns over time, but with the upside of lower volatility.

The total return on S&P 500 (SNPINDEX: ^GSPC) trackers dipped as much as 24% in the inflation-burdened market year of 2022, for instance. The Vanguard S&P 500 ETF ended the year at an 18.2% negative total return. But the Equity Premium Income ETF never fell more than 13% that year, and was back to a manageable 3.5% full-year drop by the New Year's celebrations.

This could be your favorite wealth-building ETF if a lower market risk seems worth a slightly lower average return. There's real value in stability, too.

Should you invest $1,000 in JPMorgan Equity Premium Income ETF right now?

Before you buy stock in JPMorgan Equity Premium Income ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and JPMorgan Equity Premium Income ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $682,965!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of March 24, 2025

Anders Bylund has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Mastercard, Progressive, Vanguard S&P 500 ETF, and Visa. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Gold Price Forecast: XAU/USD climbs to near $3,350 on uncertainty about Trump's tariff policiesThe Gold Price (XAU/USD) drifts higher to near $3,350 during the early Asian session on Monday after facing some profit-taking due to the long weekend. Uncertainty about US President Donald Trump's tariff policies and persistent geopolitical tensions continue to underpin the precious metal. 
Author  FXStreet
7 hours ago
The Gold Price (XAU/USD) drifts higher to near $3,350 during the early Asian session on Monday after facing some profit-taking due to the long weekend. Uncertainty about US President Donald Trump's tariff policies and persistent geopolitical tensions continue to underpin the precious metal. 
placeholder
Bitcoin’s Largest Holders Are Stacking Again — What It Means For The MarketAmidst the choppy price action, Bitcoin whales appear to be increasing their holdings, perhaps in anticipation of future price gains.
Author  NewsBTC
6 hours ago
Amidst the choppy price action, Bitcoin whales appear to be increasing their holdings, perhaps in anticipation of future price gains.
placeholder
Here are all the Trump insiders who sold off billions in stocks before tariff announcementExecutives from some of America’s biggest companies sold off billions of dollars in shares right before Trump’s tariff announcement hit the markets. The trades happened during the first quarter of 2025, as tension built around the White House’s next economic move.
Author  Cryptopolitan
6 hours ago
Executives from some of America’s biggest companies sold off billions of dollars in shares right before Trump’s tariff announcement hit the markets. The trades happened during the first quarter of 2025, as tension built around the White House’s next economic move.
placeholder
What Crypto Whales are Buying For May 2025Crypto whales are making bold moves heading into May 2025, and three tokens are standing out: Ethereum (ETH), Artificial Superintelligence Alliance (FET), and Onyxcoin (XCN).
Author  Beincrypto
6 hours ago
Crypto whales are making bold moves heading into May 2025, and three tokens are standing out: Ethereum (ETH), Artificial Superintelligence Alliance (FET), and Onyxcoin (XCN).
placeholder
Trump’s "Golden Rule" Fuel Gold Rally, Trump’s Shadow Looms Large Over Gold Bull MarketOn the morning of April 21, international gold prices rose nearly 1%, currently trading at 3,381.42 per ounce. Driven by risk−averse sentiment, gold prices breached the 3,380 mark for the first time in history and continued to set new all-time highs.
Author  TradingKey
4 hours ago
On the morning of April 21, international gold prices rose nearly 1%, currently trading at 3,381.42 per ounce. Driven by risk−averse sentiment, gold prices breached the 3,380 mark for the first time in history and continued to set new all-time highs.
goTop
quote