Top ETF Pick for 2025: A Lucrative Combination of Income and Growth
As an investor, I’m always on the lookout for opportunities to diversify my portfolio and generate passive income. That’s why I’m excited to share my top ETF pick for 2025: the JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ: JEPQ).
A Dual Mandate: Income and Lower Volatility
This ETF stands out from the crowd with its unique dual mandate. Not only does it aim to distribute income to investors each month, but it also provides lower-volatility exposure to the Nasdaq-100 index, which is comprised of 100 top nonfinancial stocks trading on the Nasdaq Stock Exchange.
A Two-Pronged Investment Strategy
The fund’s managers employ a two-pronged approach to achieve its goals:
- Equity Portfolio: The ETF holds a portfolio of Nasdaq-100 stocks, but with a twist. The managers use applied data science and fundamental research to construct a portfolio that should produce lower-volatility returns than the index.
- Options Overlay: The fund writes out-of-the-money call options on the Nasdaq-100 index, generating income through the premiums received. This strategy enables the ETF to distribute a lucrative monthly income stream to investors.
Attractive Income Yield
The ETF’s annualized income yield is an impressive 12%, significantly higher than high-yield junk bonds and other asset classes. While the income stream may fluctuate from month to month, the fund’s historical payments have been higher during periods of market volatility.
Focus on High-Growth Companies
I’m drawn to the JPMorgan Nasdaq Equity Premium Income ETF because of its focus on the Nasdaq-100 index, which features companies growing their revenue and earnings at higher rates, such as those in the technology sector. This index has outperformed the S&P 500 over the past 15 years, with a 14.8% annualized return compared to 9.6% for the S&P 500.
Less Volatility, More Returns
What I like about this ETF is that it offers exposure to the higher-returning Nasdaq-100 index with less volatility. The fund’s options overlay strategy and active portfolio management have enabled it to produce strong returns (16.9% annualized since its inception) while reducing volatility.
A Winning Combination
The JPMorgan Nasdaq Equity Premium Income ETF supplies a lucrative monthly income stream, which helps satisfy my desire for passive income. It also provides lower-volatility exposure to the faster-growing Nasdaq-100, which should help grow the value of my portfolio. That combination of income and upside is why I’d buy this ETF if it were the only one I could purchase this year.
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