JEPI ETF Review: Stunning 8% Yield in 5-Year Test (2026)

$10,000 in JEPI five years ago turned into $15,676. The same $10,000 in SPY? $19,546.

That’s a $3,871 gap — and JEPI investors knew it was coming.

The JPMorgan Equity Premium Income ETF doesn’t pretend to chase the S&P 500. It sells covered calls on it. The tradeoff: you surrender a chunk of the upside in exchange for monthly income checks averaging 7–9% yield.

For a certain type of investor — one who values cash flow over capital gains — the JEPI ETF math actually works. But most people buying it don’t fully understand what they’re giving up.

I didn’t either — until I ran the year-by-year numbers.

$10K Growth Test: JEPI ETF vs SPY (2021–2025)

Five years. Same starting amount. Two very different philosophies.

Five-year CAGR: JEPI at 9.41% vs SPY at 14.34%.

But look at 2022 — the only year where everything mattered. SPY cratered 18.17%. JEPI? Down 3.48%. While the rest of the market was bleeding out, JEPI investors collected their monthly checks and barely flinched. That single year is why this fund has $43.9 billion in assets.

The cost of that protection shows up in every bull year since. JEPI captured roughly 40–50% of the S&P 500’s upside in 2023, 2024, and 2025. JEPI’s options overlay acts like a ceiling — income flows in, but the big rallies leave without you.

Risk Profile: The Cushion Has a Cost

JEPI ETF’s volatility numbers look like they belong to a bond fund. They don’t.

A 0.38 beta means for every 1% the S&P 500 moves, JEPI moves about 0.38%. That’s remarkably low for a fund holding 126 individual stocks. The options overlay compresses both the highs and the lows.

The max drawdown tells the same story differently. JEPI’s worst peak-to-trough decline since launch was -13.71%. During the same 2022 bear market, SPY dropped 18.17% for the calendar year. In a world of sleepless nights and panic selling, that gap matters more than any yield number.

One red flag: 172% portfolio turnover. JEPI rolls call options constantly and actively manages its equity positions. High turnover means higher transaction costs baked into the fund — and short-term capital gains distributions in taxable accounts. This is not a “set and forget” ETF in the way a VOO or VTI would be.

Year-by-Year Total Returns (Dividends Reinvested)

One winning year out of five. That’s the pattern with covered call funds — the JEPI ETF shines when markets are flat or falling, and trails when markets surge. The 2023–2025 bull run was the worst possible environment for this strategy.

But here’s what the return table doesn’t show: JEPI paid monthly income every single month. Twelve checks a year, rain or shine. For someone already retired and spending from their portfolio, that consistency changes the emotional calculus entirely.

Top 10 Holdings

The JEPI ETF doesn’t hold what you’d expect from a high-yield fund. No REITs. No junk bonds. Just blue-chip equities — plus equity-linked notes (ELNs) that package the covered call positions.

Top 10 Concentration: 15.43% — the JEPI ETF has one of the most evenly distributed portfolios in the ETF universe. No single stock drives performance. That’s deliberate — the fund targets low-volatility value names from the S&P 500 and actively rebalances them.

NVIDIA and Alphabet sit in the same portfolio as Johnson & Johnson and NextEra Energy. Growth and defensive names, side by side. The ELNs layer on top of this equity basket, generating the premium income that makes JEPI’s yield possible.

Sector Allocation

The biggest tell: tech is 14.5% in the JEPI ETF vs ~32% in the S&P 500. That’s a deliberate underweight — JPMorgan’s team favors lower-volatility names, which naturally tilts the portfolio toward healthcare, industrials, and financials.

That 15.1% “Other” allocation? Those are the equity-linked notes — structured products issued by major banks (primarily JPMorgan itself) that package covered call exposure on the S&P 500. They’re not stocks, bonds, or cash.

If the issuing bank faced a credit event, those notes could lose value independent of market performance — a counterparty risk that doesn’t exist in a traditional index fund. The probability is low given JPMorgan’s balance sheet, but it’s a structural risk unique to the JEPI ETF that investors should understand.

Dividend & Cost Analysis

The JEPI ETF’s yield isn’t fixed — it fluctuates based on market volatility. When the VIX spikes, option premiums rise, and JEPI collects more income. In calm markets, premiums shrink. Monthly distributions in 2025 ranged from $0.33 to $0.54 per share — a 66% swing between the lowest and highest payments.

How much income would a JEPI ETF position actually generate for you? It depends on the size of your investment — and your tax bracket.

The 0.35% expense ratio is fair for an actively managed fund with this level of complexity. For comparison, SCHD charges 0.06% and VOO charges 0.03%. You’re paying 10× more — and the question is whether the income premium justifies the fee.

One thing most JEPI buyers overlook: tax efficiency is poor. The option premium income gets distributed as ordinary income, taxed at your marginal rate — not the lower qualified dividend rate that applies to SCHD or VOO dividends.

At a 22% bracket, an 8% yield keeps 6.2%. At 32%, it drops to 5.4%. In an IRA or Roth, the full 8% stays intact — which is why account placement matters.

Monthly Reinvestment: Does JEPI ETF Compound?

JEPI pays monthly — twelve reinvestment opportunities per year versus four for most ETFs. That sounds like a compounding advantage. The numbers tell a more complicated story.

Over the past five years, $10,000 invested in the JEPI ETF with dividends reinvested (DRIP) grew to $15,676. The same $10,000 with dividends spent — pocketed as cash each month — left the portfolio at roughly $10,268 in share value alone. The difference: $5,408 in additional growth from reinvestment.

That $5,408 represents 34% of JEPI’s total return. Strip out the reinvested dividends, and the share price barely moved in five years. The fund’s growth is almost entirely driven by plowing income back in.

Here’s the catch, though. Reinvesting JEPI’s monthly income still runs into the same ceiling. Each reinvested dollar buys more shares — but those shares are still capped by the covered call strategy. Over the same period, $10,000 in SPY with DRIP grew to $19,546. The reinvestment engine is stronger when the underlying asset has uncapped upside.

For retirees spending the income, the reinvestment math doesn’t apply — and that’s fine. Over five years, a 179-share position collected roughly $4,253 in total cash distributions. That’s real money hitting the account every month. DRIP makes JEPI’s numbers look better on paper. Spending the income is what the fund was built for.

Tax-Optimal Placement for the JEPI ETF

Where you hold JEPI matters almost as much as whether you hold it. Most of the fund’s distributions come from option premiums classified as ordinary income — not qualified dividends. That means they’re taxed at your marginal rate, which can be 22%, 32%, or higher.

A quick comparison on a $50,000 JEPI position at 8% yield:

*Tax-deferred; taxed as ordinary income on withdrawal.

The difference is stark — $1,280 per year lost to taxes on a $50,000 position. Over a decade, that’s $12,800 in tax drag that doesn’t exist inside a retirement account. Some investors hold JEPI in an IRA and keep growth-oriented funds like VOO in taxable accounts, where the lower turnover and qualified dividend treatment create less tax friction.

This isn’t a universal rule — individual tax situations vary. But the JEPI ETF’s 172% turnover and ordinary income classification make it one of the least tax-efficient equity ETFs available. Account placement is worth thinking about before buying.

Who Should Buy, Consider, or Skip the JEPI ETF

JEPI vs Competitors: Quick Comparison

SPYI (Neos S&P 500 High-Income ETF) has captured more upside than the JEPI ETF in 2024–2025 while paying a higher yield. It uses direct S&P 500 index options rather than JEPI’s equity-linked notes — a structural difference that affects both tax treatment and return capture. SPYI’s 0.68% expense ratio is nearly double, but the net return has justified it recently.

SCHD plays a completely different game. Lower yield, but the dividend grows year over year. JEPI’s distributions fluctuate with volatility. SCHD’s are designed to compound. For a deep dive, see our JEPI vs SCHD comparison.

The 8% Yield Has a Price Tag

JEPI ETF — Quick Reference

Frequently Asked Questions

This article is for informational purposes only and does not constitute investment advice. Past performance does not guarantee future results. JEPI’s covered call strategy involves risks including limited upside participation and counterparty risk from equity-linked notes. Always do your own research or consult a licensed financial advisor before making investment decisions.