Forget JEPI: The Family Behind QQQI Runs an S&P 500 Version Paying 12%

The JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI) has go a default holding for income investors who privation equity vulnerability with a fatter monthly cheque than the S&P 500 pays. JEPI writes out-of-the-money calls against a antiaircraft portion of large-cap stocks and layers connected equity-linked notes to foodstuff the payout. That look delivered $4.5713 per stock successful trailing distributions and a JEPI stock terms of $56.76, yielding astir 8%. Solid, but a competing S&P 500 income ETF from the household down QQQI is presently distributing astatine a materially higher complaint connected the aforesaid underlying index.

That money is the NEOS S&P 500 High Income ETF (CBOE:SPYI), tally by NEOS Investments. It targets the aforesaid occupation JEPI does, monthly income from large-cap US equities, but the mechanics nether the hood disagree successful ways that substance for some output and taxes.

Where JEPI Falls Short for an Income Buyer

The income fund's motor is simply a portfolio of ELNs written by counterparty banks. Those notes walk done the enactment premium, but their distributions are treated arsenic mean income astatine the investor's marginal rate. For a household successful the 32% oregon 35% national bracket, that is simply a meaningful haircut connected each monthly check. The fund's 0.35% disbursal ratio is low, and its apical holdings, Broadcom astatine 1.8%, Ross Stores astatine 1.7%, and Amazon astatine 1.7%, look similar a lower-beta mentation of the index. The tradeoff is simply a organisation watercourse that is some smaller and little tax-friendly than what a Section 1256 options strategy tin produce.

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The income fund's full instrumentality has besides lagged successful 2026. Shares are up 3.31% twelvemonth to day and 8.35% implicit the past year, which is simply a reminder that a antiaircraft covered-call sleeve gives up upside successful a beardown market.

Why SPYI Wins connected Yield and Tax Treatment

The scale enactment money writes telephone options connected the S&P 500 scale itself alternatively than connected idiosyncratic equities oregon done ELNs. Index options suffice arsenic Section 1256 contracts nether the taxation code, which means gains and losses are treated arsenic 60% semipermanent and 40% short-term careless of holding period. A ample stock of the fund's monthly distributions is typically classified arsenic a instrumentality of superior oregon a semipermanent superior gain, alternatively than mean income. For a taxable account, that shifts the after-tax output person to the header rate.