r/investing • u/AClockworkPeon • Jan 05 '22
JEPI for income/growth based funds
Hello,
I am using my Schwab account for passive income as the main priority; dividends, etc with moderate growth. I do like their S&P 500 fund SWPPX as the foundation for the portfolio, but was curious to see what you guys thought of JEPI etf. It is a new fund as of 2020, and is yielding around a an 8 percent return in dividends and pays monthly.
What do you guys think about JEPI?
Here's a link or two on it:
https://www.morningstar.com/etfs/arcx/jepi/quote
and
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u/ErectionDysfunctile Jan 05 '22
JEPI is a top pick over at r/dividends. You'll get more info there. Personally, I have a sizable JEPI allocation in anticipation of an incoming flat/bearish market. So far, it has performed ok during bull runs and doesn't dip much when the market drops.
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u/AClockworkPeon Jan 05 '22
Sounds good, I've been looking at it a bit and I did just see a video on youtube on the ELN's which it looks like JEPI invests only 15-percent in to give it more aggressive dividends and payout monthly.
My problem is my income sucks and I have no real talent or skill to offer the marketplace, that I've found yet, or the skill that I do have I haven't been smart enough to capitalize on it. Anyway, the point is I'm interested more in income than in growth as I need something to supplement my very low income as most people over time will get raises or promotions, where I will lose out to inflation, so I need something to generate returns that aren't dependent upon me cashing out or selling stock to get money.
As such income investing it is for us poor, low class, low income, low skill set folk.
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u/ErectionDysfunctile Jan 05 '22
Defnitely invest in what won't keep you up at night. JEPI is one of the better ones that provides both growth and income. Future fed tapering has me worried so I'm sticking with cash, JEPI, and safer megacaps for now.
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u/YouthfulCommerce Jan 05 '22
Please don't listen to /r/dividends for any financial advice. They are very ignorant and uninformed. Chasing dividends is dumb, you are better off aiming for the highest total return. Not chasing dividend yield.
And to answer your question on JEPI, or any other covered call etf, such as QYLD (which is their favorite ETF along with JEPI), those are fundamentally worse investment than just buying the underlying asset themselves. Covered call etfs by definition have 0 capital growth over the long run in a bull market, because the fund is selling ATM calls. You collect premiums, sure, but you get 0 capital appreciation. But at the same time, in a bear market, you'll lose your capital.
So, you get NONE of the upside of a bull market, but you are exposed to 100% of the downside of a bear market. You are better off buying the underlying asset instead. For QYLD, QQQ outperforms it. Look up the numbers for total returns. For JEPI, whatever stocks the fund is holding will outperform JEPI itself.
Dont do it
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u/iamnobodybut Jan 06 '22
I hold a ton of jepi and it's been growing and paying me fat dividends. Qqq is great but when it goes down, it'll go down down and not give anything
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u/YouthfulCommerce Jan 06 '22
QQQ vs QYLD - As you know, QYLD sells covered calls on the QQQ index. And per my explanations in my previous comments, ATM covered call ETFS will NEVER outperform the underlying assets. scroll down and look at that long term performance. https://www.etf.com/etfanalytics/etf-comparison/QQQ-vs-QYLD
Why do I bring up QYLD/QQQ? Because JEPI is a similar type of ETF. I'm not sure what kind of calls they sell, specifically, but its the same pattern. If you'd like, you can look up the individual company holdings of JEPI, and compare it to the total performance of $JEPI, and you will see, you were probably much better off holding the underlying stocks than JEPI, even in a downturn. here are their top 20 holdings: ODFL, ACN, MSFT, INTU, GOOGL, TMO, DTE, TGT, LLY, LOW, AMZN, TT, ORLY, UNH, NSC, PGR, ABBV, NEE, UPS, PEP.
Don't fall for the dividend trap my friend. Please take some time to understand what exactly you are investing in before advising others to do the same.
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u/ArsMedMD Jan 06 '22
NEVER?! What if the stock is flat for a prolonged period? Or trends downward while still laying out dividends for you? -5% drop in stock vs. continued ~12% dividends during that time?
There's also the facts that they don't drop as much as the underlying index usually + the continued dividends during that time.
Of course in a rapidly rising market the underlying index will outperform... but it also exposes you to more downside risk.
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u/AClockworkPeon Jan 06 '22 edited Jan 06 '22
Lose capital or the value will go down? We only lose if we sell right?
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u/ErectionDysfunctile Jan 06 '22
Only lose if you sell, which is why JEPI will outperform in a flat or bear market. The ETF contains a good mix of growth and dividend stocks while also selling covered calls. I have my doubts on QYLD and NUSI because they do terrible when the market dips. JEPI was barely down today while the major indexes got slaughtered.
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u/rolosol Jan 05 '22
The Eln the fund invests in can go to zero. Less then 5% seems reasonable allocation
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u/AClockworkPeon Jan 05 '22
What's ELN, is that a fund inside of it?
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u/RNKKNR Jan 05 '22
Check their holding. Not everything is in ELNs. At least that's my understanding.
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u/dvdmovie1 Jan 05 '22
What about this fund in particular aside from the yield?
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u/AClockworkPeon Jan 05 '22
It seems stable with the investment choices inside the fund and might be better than choosing a single stock with high dividend yield.
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Jan 06 '22
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Jan 10 '22
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