JEPI vs VOO: Which is Better?!

Both JEPI and VOO are designed to help investors grow their wealth, but they take different approaches to achieve this goal.

While JEPI aims to generate consistent income by holding a selection of high-quality stocks and using covered call contracts, VOO focuses on tracking the performance of the S&P 500, which includes the top 500 most valuable companies in the United States.

But which of these funds is better?

Let's explore these two funds further to help you make an informed decision.

JEPI: JPMorgan Equity Premium Income ETF

Goal: Makes money by selling options and investing in large blue-chip U.S. stocks to get monthly income from option premiums and stock dividends. The fund seeks to offer a consistent income stream with lower volatility than the S&P 500. It is ideal for retirees or those ready to live off their investments.

Number of companies held: 128

Dividend Yield: 6.28%

Annual Expense Fee: 0.35%

Benefits of JEPI: One of the unique benefits of JEPI is its attractive dividend yield, which means investors can receive a relatively high income compared to other funds. Additionally, this fund has a monthly distribution schedule, making it ideal for those who want a more frequent income stream.

JEPI is structured to deliver a 5% to 8% dividend yield over time, and 6% to 10% annual returns. The fund does this by using covered calls, meaning it writes options against an underlying portfolio of stocks in the fund to generate extra income.

Downsides of JEPI: The downsides of JEPI include its relatively high expense ratio compared to other income-focused ETFs. Also, since it focuses on income generation, it may not provide the same level of capital appreciation that some investors might be looking for.

Beating the stock market isn't the goal of this fund, and JEPI fund managers make it clear that investors shouldn't expect the high dividend yield to continue. Covered call ETFs generally perform best in volatile bear markets.

The Top 10 Stocks Held In $JEPI:

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VOO: Vanguard S&P 500 ETF

Goal: This fund aims to track the performance of the S&P 500 Index, which is composed of the 500 largest public U.S. companies.

Number of companies held: 500

Dividend Yield: 1.53%

Annual Expense Fee: 0.03%.

Benefits of VOO: VOO is known for its exposure to a large number of blue-chip companies, offering a diversified investment into top American companies. The S&P 500 index is one of the most widely watched indexes around the world. It’s commonly used to gauge how the overall U.S. economy is doing.

The S&P 500 has provided an average return of 10.67% annually since 1957.

Downsides of VOO: The primary downside of VOO is its relatively low dividend yield, which may not be ideal for income-seeking investors. Additionally, as it tracks the S&P 500 Index, it is heavily weighted towards large-cap companies and may not offer exposure to smaller, potentially faster-growing companies.

The Top 10 Stocks Held In $VOO:

Final Thoughts: JEPI vs VOO

JEPI and VOO cater to different investment objectives.

JEPI is great for investors seeking a consistent income stream and willing to accept lower share growth over the long term. However, JEPI isn’t structured to beat the stock market performance-wise over the long term.

On the other hand, VOO is ideal for investors looking for low-cost, broad exposure to the U.S. stock market with a focus on stock appreciation. VOO would be great for investors with a longer-term investment horizon.

Ultimately, it's important to consider your personal investment goals, risk tolerance, and preferences before choosing between these two ETFs.

I hope you found my blog post helpful!

Make sure to share it with whoever you think would benefit from it. :)

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I recently put together a master list of 88 different ETFs designed to support different investment goals. You can grab it here.

And as always: Buy things that pay you to own them.

-Josh

Blog Post: #092

Do you have a suggestion on which ETFs I should compare next? Let me know here.