On a relative basis, derivative income exchange-traded funds (ETFs) have seen one of the highest rates of net inflows over the past year. The highest-profile ETFs in this category have generally been the single-stock variety, but traditional covered call strategies are also drawing in new money.
The two biggest ETFs in this group by far are the JPMorgan Equity Premium Income ETF (JEPI +0.07%) and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ +0.13%).
These funds became ultra-popular in 2022, when both stocks and bonds were cratering and investors pivoted to high-yield covered call products for income and safety. In the three years that followed that bear market, returns have moderated, but the inflows continue to pour in. Combined, these two ETFs have $78 billion in assets under management (AUM).
As we kick off the second quarter of the year, let’s break down these funds to see if they still make sense and which might be the better buy.
Image source: Getty Images.
The case for the JPMorgan Equity Premium Income ETF
This ETF is actively managed and targets stocks with below-market volatility and an attractive risk/return profile. On top of that portfolio, it writes out-of-the-money S&P 500 call options in order to generate monthly income.
The key here is the low-volatility stock portfolio. With top 10 holdings, such as Walmart, Johnson & Johnson, NextEra Energy, and Ross Stores, this portfolio is built to withstand more challenging economic periods.
That’s exactly what the market is experiencing. U.S. gross domestic product (GDP) growth in fourth-quarter 2025 slowed to an annualized rate of just 0.7%. Month-over-month non-farm payroll growth has been negative in five of the past nine months. The Organization for Economic Cooperation and Development (OECD) recently put out a report forecasting a 4% inflation rate in the United States later this year. These are tough conditions that are generally not supportive of higher stock prices.
Investing in more defensive stocks doesn’t necessarily mean avoiding losses. But it is likely to be less volatile and come with less downside risk.
Even though investing in covered call strategies reduces the upside potential of the JPMorgan Equity Premium Income ETF, that extra yield can help offset any share price losses in the coming months. This ETF could perform similarly to how it did in 2022.
JPMorgan Equity Premium Income ETF
Today’s Change
(0.07%) $0.04
Current Price
$56.45
Key Data Points
Day’s Range
$55.89 – $56.63
52wk Range
$49.94 – $59.90
Volume
5M
The case for the JPMorgan Nasdaq Equity Premium Income ETF
This ETF follows a nearly identical investment methodology as the fund above, except it invests in the Nasdaq-100 stocks and writes out-of-the-money call options on the Nasdaq-100 index.
But using this index gives this ETF a whole different risk/return profile.
First, the added volatility of Nasdaq-100 stocks versus low volatility stocks generally means higher option income premiums. The JPMorgan Nasdaq Equity Premium Income ETF has a current yield of 11.4%.
It also means investing in a tech-heavy index that isn’t really in favor right now. The earnings growth rates of these companies have generally been solid, but many investors are raising questions about valuations and whether all this AI development spending will ultimately be worth it. Plus, if the economy and the labor market continue to slow, tech and growth stocks generally aren’t the ones that usually outperform.
JPMorgan Nasdaq Equity Premium Income ETF
Today’s Change
(0.13%) $0.07
Current Price
$55.59
Key Data Points
Day’s Range
$54.48 – $55.66
52wk Range
$44.31 – $60.14
Volume
6.1M
JEPI vs. JEPQ: Which is the better buy in April?
Based on macro conditions, the JPMorgan Equity Premium Income ETF is the better choice. In these challenging times, low-volatility stocks offer at least a modest layer of protection. These are the kind of durable, cash flow-generating companies that can survive with less damage. The steady demand for their products and services can mitigate some volatility risk as well.
Over the long term, it may not perform as well as its Nasdaq-100-linked counterpart. In the here and now, however, I think it’s the better choice.
