What is JEPI/JEIP ETF and how to buy it in Europe (UCITS)?

One of the major differences between investing in the US and Europe has been the availability of investing products. Some of the most popular exchange-traded funds (ETFs) in the US are just not accessible to European investors due to differences in regulation.

Luckily, in recent years, we have seen more and more popular US ETFs coming to the European markets. One of the most recent and popular ones is JP Morgan’s JEPI ETF, with the full name being JPMorgan US Equity Premium Income Active UCITS ETF USD (dist).

What is the JEPI/JEIP ETF, and what is its strategy?

Managed by one of the biggest financial institutions in the world (JP Morgan), the JEPI ETF was started in May 2020 with an initial capital of $20 million. It quickly became a popular choice for many investors, becoming the largest actively managed equity ETF with over $37 billion in AUM as of November 2024. 

Active management means that the fund manager (and its team) are actively buying and selling securities in the fund. One of the most common criticisms of actively managed funds are high fees and underperformance (on average) compared to passive funds that are just following a predetermined index.

JEPI however is charging just 0.35% in TER (total expense ratio) for both its US and European versions, which is comparable to many passive funds.

Its strategy is based on generating income (regular cash flow) while also offering some potential for growth. It does so through investing in mostly large-cap US stocks but also using derivative financial instruments. Basically, the fund is mimicking selling covered calls (options) through Equity Linked Notes (ELNs), which should, in theory, lower risk and boost income.

This fund aims to provide a 7-9% annual yield, with that number currently sitting at around 7%. Being domiciled in Ireland is tax efficient since Ireland has a contract with the USA which avoids double taxation of dividends. However, since the ETF is distributing its dividends, this may be less tax efficient in your country of residency compared to accumulating ETFs which reinvest the dividends.

JEPI performance & portfolio

Although having strong returns since its launch in May 2020, JEPI hasn’t been able to outperform the S&P 500 in this relatively short time frame. Cumulative returns up to November 25th, 2024 have been 77.89%, compared to 116.15% for the world’s biggest S&P500 ETF with the SPY ticker, according to data from Koyfin.

This relative underperformance has been driven by a number of factors, but most notably because the tech sector, which makes up a significant portion of the S&P 500, had a number of excellent return years. The fees also make a difference, with JEPI’s 0.35% being significantly more costly than SPY’s European alternatives (such as CSPX’s 0.07%).

To be more detailed, this is the comparison of the top 10 holdings for both JEPI and CSPX on October 31st, 2024 (source for JEPI; source for CSPX):

Apart from being less top-heavy, JEPI has a lower exposure to the technology sector in general than the S&P 500 index (around 20%, compared to around 30% for the S&P 500). It has a large exposure to the industrial and healthcare sectors, at around 14%, as well as the financial and consumer sectors, at about 13% and 10%, respectively.

It currently contains 246 holdings, of which about 83.5% is US equity, around 2.5% non-US equity, about 0.5% cash, and the remaining 13.5% is classified as “other”, presumably being mostly the aforementioned ENLs. These ratios are constantly changing though, which is normal for an actively managed fund.

Differences between the US and the EU version of JEPI

The biggest difference between the US and the European version of the JEPI ETF lies in regulation. European investors don’t have access to US-issued ETFs and therefore need to wait until those ETFs are listed in Europe under the UCITS regulations.

UCITS stands for Undertakings for Collective Investment in Transferable Securities and represents the European Commission’s regulatory framework for managing and selling mutual funds, including ETFs. UCITS funds can be registered and sold anywhere in the European Union using the same regulations and investor protection frameworks. Find more info about UCITS here.

Pros and cons of JEPI/JEIP ETF

Can you invest in JEPI/JEIP ETF in Europe and how?

Yes, the JEPI/JEIP ETF is available to European investors. It is listed under the ticker JEIP on the Deutsche Borse (Frankfurt Stock Exchange) and London Stock Exchange, where it can be traded in EUR or GBX, respectively. It is also listed under the ticker JEPI on the London Stock Exchange and the Six Swiss Stock Exchange where it is traded in USD.

We checked this ETF’s availability on some of the most popular brokerage and fintech platforms available in Europe in November 2024 and these are the results:

How to invest in JEPI/JEIP ETF step-by-step (Interactive Brokers)

We are going to show you how to invest in the JEPI ETF on Interactive Brokers (IB). We chose IB as one of the most popular and reputable brokerage platforms in the world, including Europe. 

Keep in mind that this process may vary significantly depending on the platform you are using. Also, make sure that you have sufficient funds in your account before the purchase.

Step 1: Open your Interactive Brokers account and click on “Trade” in the top right corner

Step 2: Type in JEIP (or JEPI if you want that version) in the search bar. Select the appropriate stock exchange that lists the ETF in your desired currency. 

Here we have chosen the Frankfurt Stock Exchange (FWB2) where the ETF is listed in USD.

Step 3: Choose the number of shares or the funds amount, input the quantity, and choose the order type. 

Here we have decided to buy 100 EUR in fractional shares and chose the market order.

Step 4: Preview your order and (if everything looks in order), execute it by clicking on “Buy Order”

Market orders are usually executed instantly inside the market’s opening hours.

That’s it, you have bought the JEIP ETF!

Alternatives

JPMorgan has had a somewhat similar product in Europe since November 30th, 2023 called the Global Equity Premium Income Active UCITS ETF. It is listed under tickers JEPG, JEGP, and JGPI on European stock exchanges and can be purchased in USD, GBX, and EUR, respectively. 

Both ETFs follow a similar high-yield strategy. The biggest difference between it and JEPI is that the former is exposed with around ⅔ of the portfolio to the US market while diversifying the rest among other developed countries.

Its TER is the same (0.35%), and its assets under management are around 10 times higher at the time of writing this article. The latter is expected since this ETF has been longer on the market.

Conclusion

The JEPI ETF has been very popular in the US for a good reason. Its high-yield strategy is appealing to many investors, but not without its downsides.

Overall, it is nice to see that the European investor is getting access to the same products available in the US. JEPI ETF is a solid choice for those seeking a high-yield fund with relatively low fees.