JEPI vs XYLG for CC approach

[hilmy83]

From my understanding both ETFs are basically CC funds.

XYLG is just a straight CC on 50% of stock portfolio (S&P) and letting the other half ride for equity growh. Total distribution is about 4-5%/year

JEPI is actively managed and uses the equity linked note (ELN) derivate which is a combo of CC and debt yield based on the stocks they choose (dividend stocks). ELN seem to trade in private market between the banks. Current yield is about 10%/year now, but since inception fund has shown positive equity growth.

When I first looked at CC funds, I was enticed by QYLD. But realizing the actual growth is negative, the yield technically gets progressively smaller.

I want something with guaranteed yield monthly without killing the total growth.

I chose JEPI cause I'm a sucker for yield and it shows steady growth (in line with the index) , but what's the downside besides giving up on total gain?

My plan is to DRIP it every month.

 

[iprph90]

That's a good question. ELNs aren't new, but some have suggested that because they lack transparency caution is advised. JEPI is relatively new and only time will tell about the safety of its dividend yield. I do own shares but keeping a close eye on underperformance and outflows. JEPQ is even a more recent offering. Your other fairly decent choices are DIVO and SCHD.

 

[tuxedo69]

Do you really know what your talking about?

 

[ET180]

Why not just buy something that you are bullish on and sell calls against it yourself? (Or short something you are bearish on and sell puts against it)

 

[hilmy83]

Why not just buy something that you are bullish on and sell calls against it yourself? (Or short something you are bearish on and sell puts against it)

I'm not an options guy so doing that on my own would mean i need to do the stock research and figure out the appropriate calls options to get the best yield

I just need something hands off that i can reinvest in.

 

[BKR88]

From my understanding both ETFs are basically CC funds.

XYLG is just a straight CC on 50% of stock portfolio (S&P) and letting the other half ride for equity growh. Total distribution is about 4-5%/year

JEPI is actively managed and uses the equity linked note (ELN) derivate which is a combo of CC and debt yield based on the stocks they choose (dividend stocks). ELN seem to trade in private market between the banks. Current yield is about 10%/year now, but since inception fund has shown positive equity growth.

When I first looked at CC funds, I was enticed by QYLD. But realizing the actual growth is negative, the yield technically gets progressively smaller.

I want something with guaranteed yield monthly without killing the total growth.

I chose JEPI cause I'm a sucker for yield and it shows steady growth (in line with the index) , but what's the downside besides giving up on total gain?

My plan is to DRIP it every month.

View attachment 305059

On the next move lower, I'll be scaling into SCHD & JEPI with SCHD being favorite (beats SPY over 1,3,5,10 year).
If you don't need the income (from dividends) then total return is what matters.
JEPI has a good short-term record but I think it may lag when the market is in an uptrend (lagged 2021...see graph below)(same with XYLG).
https://www.customstockalerts.com/stockReturnCalculator

 

[iprph90]

I'm not too keen on JEPI's PE ratio >21. SCHD around 14.5 plus an very low expense ratio of 0.06%......Recent article that goes into details on JEPI:


https://www.marketwatch.com/story/t...e-s-p-500-by-a-substantial-amount-11674480879

 

[SoyUnGanador]

So. I was curious. I wanted to test these.

XYLG is the youngest, first date with trade data is 10/5/20. So from then to current is what I ran for all 3 mentioned in the OP.

Over that period, here are the scores:

XYLG: IRR 7.5%; Max DD 21.3%

JEPI: IRR 10.56%; Max DD 13.71%

QYLD: IRR 1.58%; Max DD 24.60

So, JEPI is the absolute, clear winner of those three OP.

Then, BKR88 mentioned 1 more, SCHD, as compared to SPY. Over that same period starting with 10/5/20 performance was:

SCHD: IRR 17.41%; Max DD 16.84% (WOW!)

SPY: IRR 9.55%; Max DD 24.5%

So, that SCHD was real impressive over that period. I mean, REAL impressive.

Now, that made me wonder, how impressive was SCHD over a longer period? The first trading date for that one is 10/20/2011, so I ran it for that period versus SPY:

SCHD: IRR 13.78%; Max DD 33.37%

SPY: IRR 13.40%; Max DD 33.72%

So, even over the much longer haul, SCHD still outperformed the SPY. Barely, but it has higher dividend too, and that is worth something.

That is VERY impressive. Can any other ETFs/closed-end funds claim to do that over a significant time period?

OP, SCHD is yielding a pretty darned good 3.39% it looks like. And you know JEPI is yielding a butt-load. Seems to me the best advice is to put your $$$ in some combo of SCHD and JEPI, putting the minimum amount into JEPI that you can so as to meet your minimum desired monthly dividends, the rest into SCHD.

BKR88, thank you for pointing out SCHD to the forum. If you never do anything else for me again, I still owe you are beer!!!

 

[hilmy83]

So. I was curious. I wanted to test these.

XYLG is the youngest, first date with trade data is 10/5/20. So from then to current is what I ran for all 3 mentioned in the OP.

Over that period, here are the scores:

XYLG: IRR 7.5%; Max DD 21.3%

JEPI: IRR 10.56%; Max DD 13.71%

QYLD: IRR 1.58%; Max DD 24.60

So, JEPI is the absolute, clear winner of those three OP.

Then, BKR88 mentioned 1 more, SCHD, as compared to SPY. Over that same period starting with 10/5/20 performance was:

SCHD: IRR 17.41%; Max DD 16.84% (WOW!)

SPY: IRR 9.55%; Max DD 24.5%

So, that SCHD was real impressive over that period. I mean, REAL impressive.

Now, that made me wonder, how impressive was SCHD over a longer period? The first trading date for that one is 10/20/2011, so I ran it for that period versus SPY:

SCHD: IRR 13.78%; Max DD 33.37%

SPY: IRR 13.40%; Max DD 33.72%

So, even over the much longer haul, SCHD still outperformed the SPY. Barely, but it has higher dividend too, and that is worth something.

That is VERY impressive. Can any other ETFs/closed-end funds claim to do that over a significant time period?

OP, SCHD is yielding a pretty darned good 3.39% it looks like. And you know JEPI is yielding a butt-load. Seems to me the best advice is to put your $$$ in some combo of SCHD and JEPI, putting the minimum amount into JEPI that you can so as to meet your minimum desired monthly dividends, the rest into SCHD.

BKR88, thank you for pointing out SCHD to the forum. If you never do anything else for me again, I still owe you are beer!!!

Yes, SCHD is an interesting play. Maybe go in SCHD in retirement and use JEPI for cashflow..

I like that JEPI has less volatility. That's what put me off about QYLD.

The question is, would the rate of JEPI's DRIP catch up with SCHD total performance in the long run? In a sideway market is where JEPI shines I think. Say if these two funds existed after 2000 crash, that 10 year period where indeces was just going sideways, i would've built a bigger position in JEPI.

 

[BKR88]

Yes, SCHD is an interesting play. Maybe go in SCHD in retirement and use JEPI for cashflow..

View attachment 305169

I like that JEPI has less volatility. That's what put me off about QYLD.

The question is, would the rate of JEPI's DRIP catch up with SCHD total performance in the long run? In a sideway market is where JEPI shines I think. Say if these two funds existed after 2000 crash, that 10 year period where indeces was just going sideways, i would've built a bigger position in JEPI.

View attachment 305172

I've reduced my bullish opinion of SCHD a bit.
It outperforms in a downtrend but underperforms (slightly) in uptrends.
Removing the 2022 downtrend, SPY outperformed.
2022 falsely gives the impression SCHD outperforms 1,3,5,10 year when it was just 1 good year that gave it the outperformance.
Still a decent fund with higher yield than SPY but not quite the outperformance unless there's a strong down year mixed in.
With JEPI, you're getting hit with larger annual taxes because of the larger distributions which isn't in the total return calculations so that's another factor in favor of SCHD/SPY.