New York, NY: The JPMorgan Equity Premium Income ETF, JEPI, has recently faced scrutiny for its performance in the rising markets. Analysts have noted that the covered-call strategy employed by JEPI may not fare well during bullish market conditions. This assessment has led to a ‘Sell’ rating on the ETF by some experts.

Since the last analysis, JEPI has lagged behind the S&P500 by 6.43% in total shareholder return. This underperformance aligns with the earlier concerns raised regarding JEPI’s ability to thrive in a bullish market environment.

The current market volatility, characterized by a significant drop followed by a rebound, has prompted a reevaluation of the broader market outlook. Analysts continue to favor the S&P500 over JEPI, citing factors such as JEPI’s underexposure to technology and its higher expense compared to SPY.

Additionally, fund flows indicate a sentiment shift away from JEPI, with negative outflows observed in August 2024. This sentiment is reflective of market expectations surrounding potential rate cuts by the Federal Reserve.

From a valuation perspective, JEPI trades at a slightly higher PE ratio than the SPY, indicating a premium that further supports the preference for the S&P500. Technical analysis also suggests a potential for further underperformance by JEPI compared to SPY.

Looking ahead, analysts are closely monitoring the potential effects of the first rate cut in the current cycle, should it occur. Historical data on market reactions to rate cuts provide some insight into potential market corrections and their implications for JEPI’s performance relative to the S&P500.

Amidst these considerations, the broader market outlook remains bullish, with positive indicators supporting the preference for the S&P500 over JEPI. Investors are advised to stay informed and monitor market dynamics closely for potential shifts in investment strategies.