JEPI: Good Hedge Vs Tech-Heavy S&P500 In Current Rates Environment (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• JEPI is a more defensive ETF vs SPY, due to underexposure in the high-beta tech sector and overexposure to equity-linked-notes, which do well in a weak to sideways market environment.
• The Fed's expectations of a slower pace of rate cuts in 2025 impairs long duration technology growth stocks more, making JEPI's underexposure a favorable trait.
• The tech-heavy mix of SPY also chances of a correction (sideways or downward) due to the Fed rate policy moves, making JEPI's ELN exposure favorable.
• JEPI valuations are at a mild 9% discount vs SPY. But the relative technicals have not shown a strong bullish signal yet, despite reaching a key support level.
• As a counterpoint, a tech spending boom by enterprises is expected in 2025. This bottom-up driver will probably put some points in favor of SPY over JEPI.

Read the full article here.