2024-04-23 08:52:53 ET
Summary
- Market volatility has returned and could persist with our ongoing macroeconomic and geopolitical risks.
- JEPQ offers an effective hedge against such volatility.
- Its dividend yield of 9.5% provides current income and downside protection.
- Market volatility can boost its option income, potentially leading to increased payouts for investors.
- Finally, its holdings are less top-heavy than the Nasdaq 100 Index, thus reducing correlation to the broader market.
JEPQ yields 9.5%
I last wrote about the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) back in December 2023 (see the chart below). In that article , I argued for a HOLD thesis mainly because of two considerations. First, the yield back then (around 10%) was not as attractive as it seemed on the surface when benchmarked against other options. Some of the benchmarks I used include risk-free rates and the earning yield from the overall equity market. Second, the volatility index was very quiet at that time, and I expect the low volatility to reduce its option premium income....
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JEPQ Offers A Hiding Place Amid Market Volatility