4 Ways JPMorgan’s High-Yield JEPI ETF Is a Safe Play Today

The 90-day pause in tariffs temporally slowed the bloodbath with stocks it is too soon to consider a recovery rally.  Several investors are worried about whether they should buy the dip or refrain from further investments. For any investor, this is a period of concern and uncertainty but if you are not willing to take any more risks, consider investing in exchange-traded funds, an ideal vehicle for portfolio diversification while investing in the top U.S. stocks. JPMorgan is known for some of the best passive income ETFs which have weathered many storms and proved their strength time and again. 

A lot has been written and read about J.P. Morgan Equity Premium Income ETF (NYSEARCA:JEPI). It is a conservative equity portfolio and offers an ideal way to achieve diversification while investing in large-cap stocks. The fund ensures steady income through premiums and dividends. In an uncertain market like today, JEPI ETF is considered a safe play. This fund generates significant income through the options premium, which may vary based on market volatility but has the upside potential. Since the fund invests in blue-chip stocks, it faces lower volatility and has a strong dividend yield. Here are 4 ways it can be a good investment today.

Low risk, steady returns 

JEPI invests in S&P 500 stocks which carry low risk and steady return potential. It is a covered call ETF where the fund makes money from equity-linked notes and earns a premium. This means you get to own the top U.S. stocks without having to deal with company-specific risks. JEPI is down 7.01% year-to-date while the S&P 500 is down 10.23% year-to-date. The Nasdaq is down 15% year-to-date. This shows that JEPI has performed better than S&P 500 and Nasdaq even in turbulent times. It can stand strong even if the market moves sideways in the coming weeks. 

High dividend yield

As the name suggests, JP Morgan High-Yield ETF is actively managed and offers a regular monthly payout. The fund has a dividend yield of 7.5% and has jumped 14% in the past five years. Investors might see some upside from capital appreciation but it is ideal for passive income investors, as compared to other investment alternatives like treasury bills or bonds, a yield higher than 7% can be attractive. The impact of tariffs could lead to a dip in stocks and this is when an investment in JEPI feels like a safe choice. 

Optimal diversification 

The best thing about investing in JEPI is the ultimate diversification. The fund invests in 129 stocks and has built a heavily diversified portfolio. Its top holdings include:

• Information Technology: 14.7%
• Financials: 13.3%
• Industrials: 12.3%
• Healthcare: 12%

This helps reduce industry-specific and company-specific risks, making it easier to enjoy a steady income. Its top stocks are The Progressive Corporation, Abbvie, Visa Inc., and The Southern Company. Each of these companies has a dividend yield as follows: 

• The Progressive Corporation: 0.15%
• Abbvie Inc.: 3.77%
• Visa Inc.:0.73%
• The Southern Company: 3.24%

Besides the high dividends, many of these companies have shown capital appreciation. No single investment has a weightage higher than 2% which ensures minimal concentration risk. Investors should keep in mind that they might not see capital appreciation but they will continue to generate income through regular payouts. 

Low expense ratio 

The fund has a low expense ratio of 0.35% which is ideal for an investor who does not want to spend a lot of money on fees and other expenses. This fund offers a steady income at a low cost. 

A portfolio of high-quality stocks can stand better than individual stocks during periods of volatility. As compared to the broader market, JEPI will be able to withstand the current downturn and could be an ideal choice for conservative investors who are looking for ways to shield their portfolio from a huge dip. 

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