The JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) has grown to become one of the biggest active funds in the United States, with over $39 billion in assets under management (AUM). Its assets have jumped because of the elevated inflows and its performance over time.
Investors have flocked to JEPQ because of its strong performance, high dividend yield, and its exposure to companies in the Nasdaq 100 Index like Apple, Nvidia, and Alphabet. It has a 10.85% dividend yield.
The same is true with other active funds. The NEOS Nasdaq-100 High Income ETF (QQQI) has also accumulated over $13 billion in assets. It has a dividend yield of 14.50%, much higher than that offered by JEPI and JEPQ ETFs.
Meanwhile, the Goldman Sachs Nasdaq-100 Premium Income ETF (GPIQ) has grown to become a $4.9 billion fund with a dividend yield of 10.4%. These funds offer a higher yield than other dividend ETFs like the Schwab US Dividend Equity (SCHD) and the Vanguard Dividend Appreciation Index Fund (VIG).
Why GPIQ is better than the JEPQ and QQQI
JEPQ, GPIQ, and QQQI have a similar objective: to give investors exposure to the companies in the Nasdaq 100, while giving them substantial returns. They do this by using the covered call strategy, which involves buying an asset and writing calls, collecting premiums.
There are a few differences in how these funds achieve this. GPIQ ETF holds Nasdaq 100 Index companies and layers on a flexible, actively managed covered call strategy. Because it writes calls on only a portion of the portfolio, it retains more upside participation than the other funds.
JEPQ, on the other hand, holds a portfolio of top Nasdaq 100 Index companies and generates income through equity-linked notes (ELNs) tied to the out-of-the-money Nasdaq 100 call options. QQQI ETF uses index options and leverages tax efficiency, including tax-loss harvesting techniques.
History shows that Goldman Sachs’ GPIQ ETF is a better fund. For one, it has a lower expense ratio than the other two. Its expense ratio is just 0.29%, lower than JEPQ’s 0.35% and QQQI’s 0.68%. While the difference is not all that big, it can add up over time. For example, a $100,000 investment in GPIQ will cost about $290 a year, while a similar investment in QQQI will cost $680 a year.
Further, the ETF has historically done better than the other two because it writes calls on a portion of the portfolio, retaining more upside when the Nasdaq 100 Index is in an uptrend. History shows that, despite regular pullbacks, the index always goes up.
Data shows that the GPIQ ETF has had a total return of 9.67% this year. JEPQ and QQQI have jumped by 4.14% and 4.95%, respectively. The same has happened in the longer term. Its total return jumped by 87% in the last three years, while the other two have jumped by 59% and 49%, respectively.
JEPQ vs GPIQ vs QQQI ETFs one-year performance | Source: SeekingAlpha
To be clear. Past performance is not always a good indicator of future performance. In some instances, some companies that have underperformed the market tends to outperform. However, analysts often recommend investing in assets that have done well in the past.
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