The JPMorgan NASDAQ Equity Premium Income ETF (JEPQ) had a strong performance last year as it jumped to a record high of $59. It has risen in the previous three consecutive years, with its assets under management (AUM) rising to over $32 billion.
Similarly, the NEOS Nasdaq 100 High Income ETF (QQQI) rose to a record high of $55, up by nearly 50% from its lowest level in April last year. So, which is a better ETF to buy between JEPQ and QQQI?
What is the JEPQ ETF?
JEPQ is the second-biggest covered call ETF with over $32 billion in assets. Its goal is to give investors exposure to the blue-chip Nasdaq 100 Index, while giving them monthly dividends.
The fund, which has an expense ratio of 0.35% and a dividend yield of 9.54%, is much higher than what US bonds are offering today.
JEPQ achieves this goal by using the covered call strategy, which involves buying stocks in the index and then writing its call options. A call option gives an investor a right but no obligation to buy an asset at a certain price.
It executes the options strategy by writing equity-linked notes (ELN) and pocketing the premium. This premium normally increases in periods of high volatility. It has an expense ratio of 0.35%.
What is the NEOS Nasdaq-100 High Income ETF (QQQI)?
The QQQI ETF is a similar one to JEPQ in that it aims to generate dividend and stock returns by investing in companies in the Nasdaq 100 Index. It invests in these companies and then sells out-of-the-money call options on the Nasdaq-100 Index. It generates its returns by reinvesting dividends from its equity investments and the call premiums.
The fund benefits from using options that are treated as Section 1256, which are treated better tax-wise. It also uses the tax-loss harvesting approach to reduce the final taxes paid to the government.
QQQI vs JEPQ ETF: which is a better buy?
Covered call ETFs, which are commonly known as boomer candy funds, have become popular in the past few years. This growth is driven by their high dividend yields, and chances are that the higher demand will continue as the Fed slashes interest rates.
JEPQ is a much cheaper fund than QQQI as its expense ratio stands at 0.35%, lower than QQQI’s 0.68%. This ratio means that a $10,000 investment in these funds will charge $35 and $68 a year. This difference can add up over time.
READ MORE: Nasdaq 100 Index and QQQ ETF top laggards in 2025 revealed
However, history shows that the QQQI is able to offset the fee difference by its performance. For example, data compiled by Seeking Alpha shows that its total return in the last 12 months was 18.6%, higher than JEPQ’s 15.1%.
QQQI’s performance is primarily because of its approach, which focuses on a data-driven options approach to target high monthly income. This makes it more volatile but has a higher upside potential. JEPQ, on the other hand, is usually more stable and less volatile.
To be clear: while the QQQI ETF is better than JEPQ, it is worth noting that investing in QQQ offers a better return. As the chart above shows, the straightforward Nasdaq 100 ETF has a better performance. Its total return was 20%, a trend that has been going on in years.
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