ETF Battles: JEPI vs. ISPY vs. GPIX - A Covered Call Income ETF Rumble!

There's no shortage of novel strategies for extracting income from greedy financial markets, and the ETF industry is hellbent on helping you squeeze out every single dollar down to the last millisecond. Today's audience requested a triple header between income ETFs focused on US large cap stocks. It's Goldman Sachs versus JP Morgan versus ProShares. This is going to be fun.

Stick around. I'm Ronda Legy and you're watching ETF Battles. This is an original series program that's now in season six, and we're so glad to have you here. If it's your first time, be sure to hit that subscribe button and join our community. Our goal, of course, is to help you make better investment choices. So, if you need help analyzing any specific ETFs and you're not sure how they stack up versus each other, send us your ETF ticker symbols in the comment section below or on our X feed at ETF guide.

We could do double, triple, and quadruple headers. Also, be sure to visit the description section below. We've got program links to our program sponsor, Direction. Be sure to go to direction.com to learn more about their leverage and inverse ETFs on not just broad indexes but single stocks. Again, direction.com. We've also got links to our program judges Shaina and Dave. So, get in touch with them and also other resources. So, again, hit that description section below.

Today's triple header ETF contest is between ETFs. These are high income focused ETFs from JP Morgan, Goldman Sachs, and ProShares. And this was sent to us by a viewer named CP. Thank you so much, CP, for this excellent suggestion. Who wins the battle? Well, we're going to find out helping us to sort through this mecca of madness. We've got Shaina Sisle with Bandrian Capital and David Durkin with the Street.com. Judges, so great to see you again. Good to be here. Thanks for having us back.

So, we're going to go through these four battle categories can give you each an opportunity to weigh in with your analysis for the mystery battle category. That's where our judges have the freedom to choose any factor or thing that they feel is crucial to today's matchup. Our judges can also nominate wild card ETFs if they feel that there's something you should know about that's better. And so, watch for that. I've got the scorekeeping chores. Keep in mind that none of the battle outcomes on this program are ever known in advance by myself or our judges or nor are they ever predetermined. So, let's kick things off with the first category. That's cost. And it's always sisters before misters. So, Shaina, please get us started.

All right. So, this is a fun battle. These are quasi alt funds. And when we get into it, and the queen of alts, no less, is talking about this. So this is your wheelhouse, Sheena. Yeah, but I call them quas alt funds because they're the vast majority of them, and we'll get into it later, I don't think really are providing any sort of alternative exposure here. But when you look at expenses, you know, just on the surface, GPIX, the Goldman Sachs product, has the lowest expense ratio, but nobody has better liquidity than Jeepy.

And that's because Jeeppy is by far and away the largest product, and it's not even close. It's at $38.2 billion. And it's a really popular fund. So, even though Jeepy's expense ratio is 35 basis points, it just has substantially more liquidity, way easier to trade than the other two. And so, for that reason, it's my winner. Yeah, it's just as simple as that. Thank you, Shaya. Dave, you're up next. How do you see it in terms of cost?

Well, I'm not even going to need my full 30 seconds on this one because Shaya said everything I was going to say. Yeah, Jeep is my winner on total cost as well. The liquidity is just great on this fund and the other funds are both less than a billion dollars. They're, you know, they're not too bad on cost considering the strategies behind it. But yeah, Jeeppy is my winner, too. All right.

Well, let's dig into the details and look at the exposure strategy. That's our next category. Dave, you're up. Break it down for us. Yeah, at their core, all of these are covered call funds using some type of highinccome option overlay strategy. So, Jeppy obviously is the most popular one that everybody knows about that centers on lowvall large cap stocks that use slightly out of the money options.

They invest in ex ELNs, which is ex exchange link notes. I'm sorry, I'm equity link notes. Sorry, I'm I'm I'm, you know, getting my acronyms mixed up here. But, you know, there's so many acronyms on Wall Street. We lost track, too. So, we we joined the club of of lost acronym tracking. Yeah. But those are essentially just the stock and the options bundled together in a single security. So, same strategy.

GPIX is the S&P 500 with a dynamic option overlay. So that can that can fluctuate between high option coverage and low option coverage depending on where they see market conditions heading. So it's an actively managed product. And then ISPY, you've got the zero data expiration daily call strategy on top of the S&P 500 as well. So that's going to have a a different risk return profile. You're going to get the much higher yield on that. But you're going to see some volatility and it's really going to cap the upside. So, you got to make sure that that's kind of in line with what you're looking for.

Overall, I I would go with GPIX on this one. I like that. You know, starting with the S&P 500, it's not terribly exciting, but I think it works for this. The flexibility in the overlay strategy typically goes between 25 and 75% coverage. So, I like that it can kind of pivot with conditions at the time. I think it's just a nice balance between all three of these products. So, I'm going to go with GPIX on this one.

Shaina, you're up next. How do you see it in terms of exposure strategy between these three ETFs? Yeah. So, Dave mentioned a lot of the things I was going to mention. You know, I said it in the beginning, but these are quasi alt strategies. Jeff is the only one that's trying to provide some diversification benefit. The other two are really it's it's just about giving you S&P exposure with option premium to kind of sweeten the pot. Whereas Jeepy is actually looking to be lower involved and there's benefits to that.

Zepy also Jeepy also includes an ESG ESG overlay which I think is interesting but as was pointed out it's somewhat actively managed. It's investing in large cap stocks. It's using the S&P 500 as its universe. It's not replicating the S&P per se. It is using equity linked notes. The problem with equity linked notes is it brings in counterparty risk because they're issued by a bank. And if you paid attention during the financial crisis or if you read anything about the financial crisis, you'll know that a lot of the problems that happened during the financial crisis was counterparty risks. So ELN's bring in some risk to the portfolio that doesn't exist in the other two.

I spy is trying to do something I think kind of interesting which is to find exploit an opportunity in the markets where most covered call funds use monthly option contracts and base it on you know expiring in 30 days and they sell and it's out of the money. But by doing that, sometimes it could be out of the money when you sell it, but market volatility can change that really quick and we're in kind of a volatile market. Whereas I spy is you using a daily approach. So it's based on the expiration is in a day. Which actually can reduce some of the the risk that volatility inherently brings to option markets both good and bad.

Obviously when volatility is high the option premiums go up but if you have already shorted something you don't necessarily get the benefit of being able to sell the option contracts at a higher premium. So overall when I look at these I don't love the ESG component of Jeepy to be honest and I don't love bringing in counterparty risk with the equity link nodes. The Goldman fund is really interesting in that it's actively managed and that it's a it's a dynamic option overlay. So, it can be up to 25 to 75% of the portfolio at any given moment. But I prefer I spy.

I think they're doing something interesting where they're trying to exploit something inherent in the market which I I think it would be quite interesting. Honestly the performance of these funds is not demonstrating to me that J JPEX is active approach is adding tons of alpha. So but then again none of these funds have really long track record so it's hard to really tell but for the reasons I just mentioned I spy is my winner. So that takes us next to performance and yield. And Shaina you're still up so break it down for us.

These strategies are interesting in that inherent in what they're trying to do is to have strong monthly income distributions. It's ironic to me because Jeeppy is the most popular fund in this battle and it's not even close with like none of the other funds are even at a billion dollars. Jeffy's at 38.2 billion. Everybody knows Jeppy. But on the surface, it's actually not a better product performance-wise, yield-wise. It's not really accomplishing its goal of having lower V. Like, if I if I think about the day we're recording this, and obviously this comes out in a couple weeks, but the day we're recording this is the last day of April, and April has been a crazy month for the markets. So you would want a strategy that is looking to do low ball and have this covered call overlay to do, you know, perform better than the other two funds in the battle, but that's not been the case. JPX, GPIX has actually done better. And Jeffy has has has kind of not done great in the last month, but it's done better on the threemonth and and and then you...