JEPI vs JEPQ: S&P 500 or Nasdaq for Monthly Dividends?
Both JEPI and JEPQ come from JPMorgan and use covered call strategies to generate high monthly income. The key difference? JEPI tracks the S&P 500 while JEPQ tracks the Nasdaq 100. This seemingly simple distinction leads to dramatically different risk/reward profiles.
Let's break down exactly what makes each ETF tick—and which one might fit your portfolio better.
Quick Comparison at a Glance
JEPI: The Defensive Income Play
JEPI (JPMorgan Equity Premium Income ETF) invests in low-volatility stocks from the S&P 500 and sells equity-linked notes (ELNs) tied to the index to generate premium income.
The portfolio is actively managed to favor defensive sectors like healthcare, consumer staples, and utilities. This makes JEPI more stable during market downturns—but also means it will lag during tech-driven bull markets.
JEPQ: Higher Yield, Higher Risk
JEPQ (JPMorgan Nasdaq Equity Premium Income ETF) uses the same covered call strategy as JEPI, but applies it to Nasdaq 100 stocks. This means heavy exposure to tech giants like Apple, Microsoft, Nvidia, Amazon, and Meta.
The Nasdaq's higher volatility generates larger option premiums—hence the higher yield. But this also means bigger swings in both directions.
Yield Comparison: The Numbers Don't Lie
JEPQ consistently delivers 1-3% higher yield than JEPI. Here's why:
- Higher volatility = higher premiums: The Nasdaq is more volatile than the S&P 500, so option buyers pay more for protection.
- Tech stock volatility: Individual tech names have bigger price swings, generating richer option premiums.
- More aggressive positioning: JEPQ can capture more premium income during market uncertainty.
However, higher yield doesn't always mean higher total return. In a sustained bull market, JEPI's more diversified approach may deliver better risk-adjusted returns over time.
Risk Profile: What Could Go Wrong?
JEPI Risks
- Underperformance in tech-led rallies
- Yield compression in low-volatility periods
- Limited upside capture (~60-70%)
- Complex ELN structure
JEPQ Risks
- Higher drawdowns in bear markets
- Concentrated tech exposure
- Shorter track record (since 2022)
- More volatile income stream
Market Scenario Analysis
Which One Should You Choose?
Choose JEPI if:
- You prioritize stability over maximum yield
- You're concerned about tech sector concentration
- You want a longer track record to evaluate
- Defensive positioning matters to you
Choose JEPQ if:
- You want maximum monthly income
- You're bullish on tech long-term
- You can stomach higher volatility
- You want more growth potential
The Portfolio Approach
Many income investors don't choose between JEPI and JEPQ—they hold both. A common allocation strategy:
This approach smooths out the volatility while still capturing above-average yields from both ETFs. It's diversification within the monthly income space.
The Bottom Line
JEPI and JEPQ are two sides of the same coin. Both deliver exceptional monthly income through covered call strategies, but they cater to different risk appetites.
JEPI is the defensive choice—lower volatility, lower yield, broader diversification. JEPQ is the aggressive choice—higher volatility, higher yield, tech-heavy exposure.
Your decision should come down to your risk tolerance and whether you believe tech will continue to lead the market. Or just own both and let them balance each other out.
Run Your Own Numbers
See exactly how much monthly income you could generate with JEPI, JEPQ, or a combination of both.