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Unlike open-end mutual funds, exchange-traded funds (ETFs) trade on major exchanges like stocks. They own financial assets such as stocks, bonds, currencies, debts, futures contracts, and commodities such as gold bars. One massive advantage ETFs have is that they can be bought or sold anytime the markets are trading.
According to the Internal Revenue Service (IRS), passive income generally includes earnings from rental activity or any trade or business in which the individual does not materially participate. It can also include income from limited partnerships and other similar enterprises where the individual is not actively involved.
Investors, especially those nearing or in retirement, increasingly seek passive income streams to supplement social security, pension income, or qualified retirement account withdrawals.
We screened our 24/7 Wall St. passive income ETF database, looking for the one fund that many investors consider the best of all. After some careful consideration, one mammoth fund run by one of the top Wall Street investment banks is the clear winner. It is also the best dividend ETF passive income investors love. Don't forget to grab this awesome free report that highlights dividend legends.
JPMorgan Equity Premium Income ETF
JPMorgan Chase & Co. is the largest bank in the United States and the world's largest bank by market capitalization as of 2023.
With a stunning $33.74 billion of assets under management, JPMorgan Equity Premium Income ETF ( NYSEArca: JEPI ) is the world's largest actively managed ETF. It continues to take in billions since its inception in 2020 and is run by two of the top portfolio managers at JPMorgan. The two managers, Hamilton Reiner and Raffaele Zingone, have a combined 70 years of investment experience.
The fund seeks to achieve its investment objectives by:
- Creating an actively managed portfolio of equity securities comprised significantly of those included in the fund’s primary benchmark, the Standard & Poor’s 500 Total Return Index (S&P 500 Index)
- Through equity-linked notes (ELNs), selling call options with exposure to the S&P 500 Index
- Dividend yield = 7.35% paid monthly
- NAV = $55.37
- Expense ratio = 0.35%
This is how the JPMorgan fact sheet describes the funds approach to investing and objectives:
- Generates income through a combination of selling
options and investing in U.S. large cap stocks, seeking to
deliver a monthly income stream from associated option
premiums and stock dividends - Constructs a diversified, low volatility equity portfolio
through a proprietary research process designed to
identify over- and undervalued stocks with attractive
risk/return characteristics - Seeks to deliver a significant portion of the returns
associated with the S&P 500 Index with less volatility, in
addition to monthly income
The fund has a four-star rating from Morningstar and is classified in the Derivative Income category.
Here are the top 10 stock holdings in the fund:
- Microsoft
- Amazon
- Trane Technologies
- Meta Platforms
- Progressive Corporation
- Intuit
- Alphabet
- Mastercard
- Southern Company
- AbbVie
∴
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