ETF Battles: GPIQ vs. QQA vs. JEPQ vs. QQQI- Covered Call Cashflow Clash!

Looking for income in today's market? Well, covered call ETFs might be the ticket. They take stocks you already know inside the S&P 500 and NASDAQ, and they layer on an options strategy that generates cash flow. Today's audience requested ETF battle is a quadruple header between covered call ETFs from Goldman Sachs, JP Morgan, Invesco, and Neos. So, who wins the battle? Find out right after this.

This is ETF Battles and I'm Ronda Ley. It's great to see you again. If it's your first time watching, we're glad to have you with us and we're glad you found us. Welcome aboard. Be sure to hit the subscribe button and of course the like button if you've been enjoying our content. If there's a certain ETF battle you would like to see, be sure to send us your ETF ticker symbols in the comment section below or on our XFE at ETF guide.

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Interesting matchup. There's been a lot of interest in covered call income generating ETFs. And judging today's contest, we've got a duo extraordinaire, David Durking, an independent ETF analyst with the Street.com, and Aan Ferris with Bloomberg. Guys, welcome back. So great to see you again.

So, we got our four battle categories, cost, exposure, strategy, performance, and yield are combined. And then we add our mystery category where you, our judges, can choose any factor or thing that you think is pertinent and crucial to today's contest. Our judges, can also nominate wildcard ETFs if they feel there's better choices somewhere else, or they can opt for split decisions. None of the battles that we do on this program are ever predetermined or known in advance by myself or our judges. The first category is cost. Let's start with Aan. Please give us your analysis.

Great picks because there's so much involved which we'll get into in a little bit. But let's just look at headline cost. So expense ratio. So you have gold the golden product GPIQ 29 basis points. Jeep Q which is the first one ever launched of this series that's 35. Neos QQQI is 68 more expensive and QQA which is the newest entrant from Invesco that's 29. It's deliberate. It matches the Goldman product. So issuers are very kind of clever in how they price things.

Now, I just mentioned they're all really popular because even though the smallest one has half a billion dollars, Jeb Q has 32 billion. They trade a lot. They're they've got sizable assets. So, I think for this one, we're just going to have to go it's a tie really because between GBIQ and QQA just because it's 29 basis points. Again, we'll talk about why that's not necessarily why you need to be picking it, but I think just because of how involved these are, let's just go with the cheapest one. So, I think it's a tie between Goldman and Invesco.

Thank you very much, Aan. That's a strong start. You're up next. David, give us your analysis. Yeah, I see it pretty much the same way. You know, the 29 basis points for QA and GPIQ are again the lowest. I'm going to use trading spreads as the tiebreaker here, though, because QQA has a larger trading spread. It's got a smaller asset base, so it's going to cost a little more to trade. GPIQ again has that larger asset base, so trading spreads are pretty thin on it. It does have a six basis point advantage over Jeep Q. So, I'm going to call GPIQ the winner in this one.

Thank you, David. That takes us next to Exposure Strategy. And you're up, Dave. So, give us your take. Yeah, at a 30,000 ft view, all of these funds look the same. They're all based on the NASDAQ 100. They all used some sort of derivative income strategy. They all pay monthly income. So at that level, they all look pretty similar, but it's really a function of the mechanics of it really how it overlays that covered call strategy and kind of how much how much options exposure it's going to use.

So Jeep Q and QQA use ELNs to get their exposure. So there's some counterparty strategy and and the banks that issue those notes. So that's a little bit of a unique twist on it. GPIQ uses more of a traditional covered call strategy and it's only overlaying about 25 to 70 75% of the portfolio. So it can actually sort of change according to conditions. It can add exposure, take away exposure depending on how the managers feel. So, because it doesn't go sort of full boore 100%. It actually has more upside than the other ones. So, based on that, I think I'm going to go with GPIQ again as the winner in this category.

I think it's just a nice straightforward strategy. It doesn't get into, you know, some of the other things like using ELNs or or other things like that to overlay its strategy. It's it's just sort of a cleaner way to do it. I like that it has a little more upside potential. So, I'm going to go with GPIQ in this one.

Got it. Thank you, Dave. And if you can just give us that acronym ELN, what does that stand for? That is exchange linked notes. Got it. So that's it's basically just a product where they roll the the underlying security and the option into just a single security as opposed to buying the stock separate and then writing covered calls separately. So it's just kind of a twoin one package.

Got it. It's a derivative. Correct. It's a derivative where it packages the underlying the underlying stocks or the index like the NASDAQ 100 and then has the the written option strategy built in. So, it's like one security, you get the whole the whole covered call strategy. Perfect. Thank you for the explanation on that and added details. Aan, you're up next. How do you see exposure strategy in this battle?

I thought that was really great. And I think to he was spot on in that what's great about the industry by the way is okay, Jebq was first. They were using lens and you have all these different versions to sort of try to make it maybe more efficient or take a different spin on taxes. But overall, like you said, they're all kind of doing the same thing. I think it's sort of just looking personally what kind of scenario you is this in a taxable account or qualified account are you looking for more income? Are you looking for more upside? So you have those kind of choices across all of these.

So one thing that I I do like about GPIQ that he mentioned that it's dynamic. So they're not keeping a consistent hedge. They're sort of just seeing what the market conditions are and they might change that. So you do have the potential for more equity participation with GBIQ. Jeb Q was the first. It's the largest, but like he was mentioning these ELNs, they tend to be less tax efficient. That's one that's so they're they're taxed more as ordinary income. So that can impact your tax situation if that's what you're using.

QQQI from NEOS actually came out after Jeb Q to alleviate that issue. So they're not using as much ELN. They're using index options which are more tax efficient. So really it's kind of the same thing but just more tax efficient with QQQI. QQQA like you was mentioning is very similar to GPIQ. It's newer. It's a little bit cheaper. With QQQI, the NEOS one, it tends to be a little bit steadier in its payouts. Jeb Q can sometimes be a little bit more sporadic just based on what the market is doing.

So again, they're all try more or less trying to do the same thing, but I agree with David. I like the dynamic aspect of the Goldman GPIQ product. that's the only one sort of doing that. So, I like the ability that they can maybe just sort of tailor that to get you a little bit more upside. So, it's close. They're all sort of there. Some of the differences are negligible. Some are bigger differences, but I think I'm going to go with the Goldman U GPIQ product.

Got it. That takes us next to performance and yield. And of course, in an income battle, we got to look at yield. So, give us your take, Aan. How do these ETFs look in this particular category? So, I would say overall when you're buying these, I think one thing you need to look at when you plot this against its underlying index, the Q's, the NASDAQ 100 just because over time it tends to go up. You're going to lag the market. That's just something you you're going to lag. Just something to keep in mind.

It's maybe not why you're buying this product. You're buying it because you want steadier income or a little bit more downside protection. So, obviously going into that, all of these are going to lag the market as it goes. you know, there are scenarios obviously when the market goes down that these will do better, but just keep that in your, you know, in the back of your mind. QQA is pretty new, so there's not a whole lot of data. More or less, the largest one is Jeb Q.