Why JEPI Is Likely A Worse Bet Than SPY (Archive)
JEPI’s covered calls, tech underweight, rich valuation, and weak technicals threaten underperformance.
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
- As I had expected, JEPI has underperformed the S&P500 since my last update at the start of the year.
- Despite a volatile start to August, I remain bullish on the S&P500 due to positive EPS growth, which does not indicate chances of a recession or a prolonged market downturn.
- A bullish market outlook is unfavorable for JEPI due to its 13.5% allocation to a covered call strategy, which is effective mostly in flat to falling markets.
- With a 16.8% technology underweight vs the S&P500, JEPI may be on the wrong side of expected rate cuts, which would benefit longer-duration technology stocks.
- JEPI also trades at a premium to SPY and technicals vs the S&P500 point bearish.
Read the full article here.
Disclosures and Disclaimers
Past performance ≠ future results. Not investment advice. See full Disclaimer.
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