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Building Wealth: Should You Ride with JEPI or Stick with SPY?
Can a covered call strategy compete with the long-term powerhouse of the S&P 500?
Ramesh C
May 10, 2025
🧠 JEPI vs. SPY: A Tactical Comparison for Income and Total Return Investors
📈 Overview
ETF | Objective | Yield (approx.) | Expense Ratio | Launch Date |
|---|---|---|---|---|
JEPI | Income generation w/ equity upside | ~8.07% | 0.35% | May 2020 |
SPY | Passive S&P 500 index tracking | ~1.27% | 0.09% | Jan 1993 |
⚙️ Strategy Breakdown
Combines large-cap U.S. stocks with an options overlay (ELNs).
Sells covered calls to generate premium income.
Focuses on lower volatility and high monthly income.
Less exposed to mega-cap tech, more defensively positioned.
SPY (S&P 500 Index ETF):
Fully tracks the S&P 500, giving exposure to all sectors weighted by market cap.
Heavy exposure to technology, particularly names like Apple, Microsoft, Nvidia.
No active management or options overlay—pure growth and capital appreciation.
📊 Performance Comparison
Growth of $10,000 Investment (May 2020 – May 2025)
JEPI: $17,096.35
SPY: $20,583.33
Data Source: TotalReturns.com
📉 Annual Returns
Year | JEPI | SPY |
|---|---|---|
2025 (YTD) | -0.61% | -3.42% |
2024 | +12.59% | +24.89% |
2023 | +9.82% | +26.18% |
2022 | -3.49% | -18.18% |
2021 | +21.53% | +28.73% |
2020 | +18.61% | +18.33% |
Data Source: TotalReturns.com
📉 Risk Metrics
Maximum Drawdown:
JEPI: -13.71%
SPY: -24.50%
Volatility:
JEPI: 4.96%
SPY: 7.48%
Data Source: TotalReturns.com
💰 Income vs. Growth Focus
Use Case | Choose JEPI | Choose SPY |
|---|---|---|
Regular monthly income | ✅ High yield via covered calls | ❌ Low dividend yield |
Long-term capital growth | ⚠️ Limited upside due to call writing | ✅ Full market participation |
Tax-advantaged accounts | ✅ Ideal for Roth or Traditional IRA | ✅ Also good (especially SPY for growth) |
Low volatility / defense | ✅ Better in bear markets | ❌ More volatility |
🔍 Real-World Example
If you needed monthly income for early retirement or college funding, investing in JEPI might provide:
$100,000 → ~$700–$800/month in income.
More stable price behavior during volatility.
In contrast, SPY:
$100,000 → ~$100/month in dividends.
Far better long-term capital appreciation.
🧩 Ideal Portfolio Use
Strategy | Allocation Suggestion |
|---|---|
Core Growth Portfolio | SPY (60–80%) |
Income-Focused Retirement Portfolio | JEPI (40–60%) |
Blend (Balanced Growth + Income) | SPY (60%) / JEPI (40%) |
🧠 Final Takeaway
JEPI is excellent for generating consistent income with reduced volatility, making it suitable for retirees, conservative investors, or those in the decumulation phase.
SPY remains a gold standard for long-term capital growth and should form the foundation of most accumulation-phase portfolios.
📈 Price Charts
To visualize the performance and compare JEPI and SPY, you can refer to the following interactive charts:
Portfolio Visualizer: Backtest Portfolio Asset Allocation
These tools allow you to explore various performance metrics, including total returns, volatility, and drawdowns, providing a comprehensive view of how each ETF has performed over time.