Equity markets have been surprisingly resilient in 2023, yet this has left investors feeling uneasy with what to do next. Many are wondering if they’ve “missed it” and are sitting in cash trying to figure out when to enter the market and if this rally is sustainable going forward. For the investors who are assessing their asset allocation today, a compelling solution is the actively managed J.P. Morgan Global Equity Premium Income ETF (JEPG), which seeks consistent monthly income and appreciation potential, with lower volatility than the global stock market.
Navigating the concentrated market rally
The stronger start to the year for MSCI World was also historically narrow in scope, with the vast majority of returns driven by just seven stocks in the US. At this point, investors may be looking for opportunities in equities beyond just the market leaders of 2023, especially given many other areas of the market and regions still look attractive from a valuation perspective. Should market returns be more muted going forward, investors will continue to seek high levels of income, particularly in ways that do not mean taking on too much volatility or too little liquidity.
As an equity options-based solution comprised of a high-quality equity portfolio and selling index call options, JEPG provides a way for investors to meet income and total return at lower risk versus traditional equity strategies.
A conservative equity income strategy designed to reduce downside exposure by forgoing some upside participation.
A conservative equity ETF seeking income as the outcome, balanced with an attractive total return
JEPG is a highly liquid ETF offering an active solution with daily transparency at a low cost. The strategy combines equities with options to strike a balance across yield, capital growth and risk. JEPG seeks to deliver a significant portion of the returns associated with the MSCI World Index with less volatility, in addition to monthly income.
JEPG applies a time-tested process which is also used for the largest active ETF in the world for an underlying US equities portfolio instead of global equities. Here’s how it works: We use fundamental bottom-up research to build a higher-quality, lower-beta portfolio of Global large cap equities with less volatile earnings and share prices. We then sell index options against that long-only portfolio and use the premiums to generate income, in addition to the dividends from the underlying equities we hold. The result is a conservative equity income strategy designed to reduce downside exposure by forgoing some upside participation.
With JEPG, investors receive:
- Fully active, broadly diversified equity portfolio: Leverages 80+ research analysts and an over 30-year proprietary process to find attractive stocks across sectors.
- Innovative income: Avoids the duration risk of higher- yielding bonds and the quality risk of higher-yielding stocks and extended fixed income sectors.
- Unique options strategy: Sells call options every week to adapt to changing market conditions. When volatility spikes and interest rates rise, for example, JEPG has the potential to provide higher income when investors most need the cushion against fluctuating prices.
- 100% payouts: Distributes all monthly net income from dividends and options premium in distributing share classes (dist).
JPMorgan Global Equity Premium Income ETF at a glance
Four ways to build stronger portfolios with JEPG
- Add to income portfolios to achieve consistent, attractive yields regardless of what happens with interest rates or equity dividends.
- Replace or complement higher-yielding bonds with a strategy offering no duration or credit risk and comparable, if not higher, income potential in exchange for taking on some equity risk.
- Deploy excess cash for investors looking to ease back into equities with about one-third less volatility.
- De-risk equity portfolios by locking in gains from existing strategies and reinvesting the proceeds in a more conservative alternative.
With an uncertain path for fixed income and equity market returns ahead, now is the time to be creative and active in your search for yield and total return. Discover how JEPG can help you solve for both market participation and income without sacrificing quality, liquidity or long-term growth potential.
Investment Objective and Risk Profile
JPMorgan ETFs (Ireland) ICAV – Global Equity Premium Income UCITS ETF*
The objective of the Sub-Fund is to provide income and long-term capital growth.
The risk indicator assumes you keep the product for 5 year(s). The risk of the product may be significantly higher if held for less than the recommended holding period. In the UK, please refer to the synthetic risk and reward indicator in the latest available key investor information document.
- The value of your investment may fall as well as rise and you may get back less than you originally invested.
- The value of equity securities may go down as well as up in response to the performance of individual companies and general market conditions, sometimes rapidly or unpredictably. If a company goes through bankruptcy or a similar financial restructuring, its shares in issue typically lose most or all of their value.
- The value of FDIs can be volatile. This is because a small movement in the value of the underlying asset can cause a large movement in the value of the FDI and therefore, investment in such instruments may result in losses in excess of the amount invested by the Sub-Fund.
- While the Sub-Fund uses an FDI overlay strategy which is intended to provide income, there is no guarantee that the derivative strategy will achieve this. The Sub-Fund may forego some capital apprecia- tion potential, while retaining the risk of loss should the price of the underlying decline.
- Selling call options will create exposure for the Sub-Fund, as it may have to deliver the underlying securities or their value and, should the market move unfavourably, this may result in an unlimited loss.
- REITs and real estate related investments are subject to the risks associated with the ownership of real estate which may expose the relevant Sub-Fund to increased liquidity risk, price volatility and loss- es due to changes in economic conditions and interest rates.
- Since the instruments held by the Sub-Fund may be denominated in, or have exposure to, currencies other than the Base Currency, the Sub-Fund may be affected unfavourably by exchange control regulations or fluctuations in currency rates. For this reason, changes in currency exchange rates can affect the value of the Sub-Fund’s portfolio and may impact the value of the Shares.
- The Distributing Share Classes give priority to dividends, rather than to capital growth, and may at times distribute capital gains.
- Further information about risks can be found in the “Risk Information“ section of the Prospectus.