JEPI ETF inflows slip as the S&P 500 rally gains steam

The JPMorgan Equity Premium Income (JEPI) ETF has seen a sharp increase in inflows this year as demand for the fund continued. The fund has seen the amount of inflows jump to over $11 billion, to the current $28 billion.

Recently, however, the amount of inflows in the fund has been in a downward trend. In July, inflows came in at $834 million, the smallest jump this year. Inflows have gradually dropped after peaking at over $2.4 billion. It was also the smallest increase since October last year. 

JEPI ETF inflows chart

JEPI’s inflows decline happened as the S&P 500 index continued its strong comeback. The blue-chip index, has jumped by more than 18% this year. JEPI, on the other hand, has risen by about 6% this year.

JPMorgan Equity Premium Income is one of the most popular funds in the industry. It has become a well-known fund, thanks to its 10% dividend yield, which is higher than the SPY ETF’s 1.50%. 

JEPI achieves this return by using a covered call strategy. As I wrote here, covered call is a strategy in the options market that gives you the right to purchase shares you already own at a specific price at any time before the expiry date. 

By design, covered call ETFs are meant to generate higher returns when the underlying index is lagging. This explains why JEPI outperformed the S&P 500 index in 2022 as it dropped.

While JEPI’s growth is stalling, JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) has gained momentum. JEPQ’s ETF had over $770 million in inflows in July, up from $563 million in June. Its inflows have jumped by over $3.3 billion this year.