Been waiting for this one. It looks so good and with a yield like that I just think it’s too good to be true. No way it stays constant with that distribution.
I agree, those numbers aren't sustainable. Tech growth just happens to be on a tear at the moment so they launched at time that makes them look fantastic. Once the market calms down we'll have a better sense of what this fund will do over the long term. I expect a lot of volatility from the price of this fund; we shall see. Either way, it's an interesting one to keep an eye on.
Selling calls into a bull run is a pretty good indicator of management selection skill, it's really easy to underperform an index if you are too aggressively capping upside.
Yes, it does tell us something about their skill. Keeping up with QQQ is impressive. I'd like to see how it does after a correction as that will also tell us something useful.
Thanks for the great video. I agree FEPI has some potential, but I'd wait and see its perform in a market correction. Too many covered call funds out there never recover its NAV from a correction.
Tech growth has been hot for about 20 years now and is almost always overpriced. I expect that in 10 years, it will still be overpriced and the journey from here to there will be volatile. It's high risk and high reward, but I want to have some exposure to it. The trick is not to have too much!
I really don't understand the merits of the critique of this ETF. None of the other "safer" lower yielding funds you alluded to would do ANY better in a market downturn. In fact, the only ones that would/did do fairly well, employ the exact same covered call options as FEPI. SCHD is a flip-phone era fund that still hasn't recovered even during this current bullrun. Move into the present bro.
Every time I say "Tech is overvalued"...the market goes up! I sold Amazon in 2017 because I thought it was overvalued. I suck at market timing! The market, including FEPI, will experience substantial drops but I have no idea when.
@@armchairincomechannel That's the year I bought into JEPI, I should know I still haven't recovered, my cost average is around 58 dollars, I did do a lump sum purchase in the low 60s back in early 2022, and granted it payed an average dividend of .54 but the share price lost value. Per dollar invested and dividend income returned, I would of yielded more return of my investment in FEPI, my last purchase on Jepi, was late 2022 another lump sum when it was trading around 54ish, lately the dividend is nothing to brag about its been in the .30 on average. To anyone who buys JEPI just be aware you get best dividend when the stock tanks, hence why I rather take FEPI to replace JEPI, at least if they both tank in price Ill get a better return on FEPI.
I don't understand your reasoning. If you're an older investor you probably should stay with j e p i. it's more conservative than f e p i more value-oriented that did good in 2022. a good core position of j e p i with some more aggressive funds like j e p q and f e p i is the way to go when you're older and retired.
@@armchairincomechannel do you have a video where you chronicle your retirement journey using this 8% strategy? It would be very interesting to retirered/pre-retirees to learn how you handled the ups and downs of the market and its effects on your portfolio. I appreciate all that you do for us
Thanks for the suggestion. At this early state of my channel I'm trying to focus on the stocks rather than me, but as the channel develops I'm open to sharing more about my personal journey.
@@armchairincomechannel understandable, you obviously thought it was a safe enough investment style because you always take a conservative approach to “new shiny objects” that hit the market, which gives me a insight to the strategy. Thanks again
Thanks for the analysis. 4 of your TOP Ten investments are available in Europe. 6 are not: PBDC, BST, JEPQ, PFFA, JEPI and SPYI are not available to trade for EU retail investors. Same goes for FEPI. Why don't you make a 'Top Ten' list for your Europe Audience? 🇪🇺
Hi, and thanks for your feedback on the European availability of these funds. I appreciate your suggestion but I don't have access to information about how the European "system" selects which stocks are available. Within the Armchair Income Community there are some Canadian investors that discuss Canada specific income investment topics. Occasionally there's a post in there related to Europe. At some point I'd like to shift from FB to a more advanced Community platform that allows individual chat rooms for specific topics like this...however, the advanced Community platforms are quite expensive and I want to keep the Community free if possible.
@@armchairincomechannel Thanks for the reply! Maybe instead of your 'Top Ten' do a 'Top Twenty'. There would be more businesses for EU Retailers to analyse and choose from. Thanks again for your Work!
Open an account at a broker with (unlimited) access to the US market and you don't have any issues. Check the offering of Interactive Brokers, one of their numerous introducing broker (e.g. LYNX, CapTrader, swissquote...), of Freedom24 etc.
I feel like FEPI is behaving exactly as expected...high yield and high volatility. It performs well during rising and flat markets, and falls behind when tech corrects.
Yes, so unfair.. In 2016 there was introduced a new regulation (MiFID) which prevents EU retail investors from buying US ETFs and CEFs. You have to!qualify for professional investor in order to have access to those instruments.May I ask you one question in that regard? Do you know if SEC got some protection on the investments on US stocks in case of bankrupcy of a broker like IBKR for non US citizens?
The vast majority of investments with a yield this high are a dividend trap. I'm more interested to know the "Why". In this case, I'm comfortable with the risks. It's still new but I'm keeping an open mind.
Fepi sells 10% out the money call, does it mean 90% profolio will have the upsides? Sorry my English not good, I'm a 30+ year old man who tries to retire at early age lol😅
10% out of the money means the first 10% of any appreciation above the share price will be captured, and anything above that will not. The percentage of the portfolio that is written against is called the "Overwrite Level" and that's a separate measure.
Your analysis is not quite accurate... per the prospectus: "The Solactive FANG Innovation Index, the benchmark Index for the Fund, includes 15 technology stocks. There are 8 core-components in the Index: Apple (AAPL), Amazon (AMZN), Meta Platforms (META), Alphabet (GOOGL), Microsoft (MSFT), Netflix (NFLX), NVIDIA (NVDA), and Tesla (TSLA). The remaining 7 stocks within the Index are determined by selecting the top traded names..." It's fixed 8 FANG + 7 top vols. It may just happen the 8 FANG are also top vols stocks, but they may not be.
You make a good point. I found the prospectus confusing. The prospectus strategy calls out 8 stocks by name but the detailed "Index Selection" doesn't. Perhaps they assume that those 8 will continue to qualify per their rules for the long term. There are also some lengthy explanations regarding circumstances under which the components can be changed. I doubt whether those 8 are set in stone. If one of them collapsed in value, I don't think it would remain in the fund just because it appears in the Strategy paragraph.
@@armchairincomechannel In my opinion, I think the "8 FANG" are fixed until they decide to change it for whatever their reason. They could add to the 8, remove from the 8, or swap from the eight... but given these 8 baseline stocks are specifically stated in the prospectus, they would have to provide notice of change in investment philosophy to shareholders. As with most technology stocks, new ones come in (start up, spin offs, etc) and some go away (merger, out of business, buyout).
JEPQ works good on corrections and weak on growths periods because plays with index (less volatility). FEPI works good even on growths periods because write calls with stocks (not index) and they have more volatility. So on corrections I think FEPI will fall down same % as QQQ, but will give 50% more dividends than on growth period (because of volatility). JEPQ will fall 50% less than QQQ and will increase dividends too. Those dividends could be used to buy QLD on corrections because QLD falling 2 times faster.
It's doing well on all 3 fronts. Remember that its concentrated in tech stocks so when there's a tech correction, it will take the full hit, then recover more slowly than the NASDAQ 100 because of the covered call limiting the upside.
@@armchairincomechannel Tech is the future. It may have some corrections along the way, but it will probably be the best investment over then next 50 to 100 years.
@@armchairincomechannel I like innovations, financial ones as well. And I'm averse to big players, be it JPMorgan, Goldman Sachs... or Blackrock, Vanguard, Schwab... for the sake of competition 😉 In consequence I contibuted to the NAV/AuM of SVOL, SPYI, FEPI... and others (but not to hyped single stock/high yield ETF). And I intend to do the same with AIPI. Until now my approach has paid off. 💰 Nevertheless I'm aware of the risks of innovations - and have an eye on the trend of NAV and distributions.
Thanks for the video. This is just too new for me to nibble on. We really need another 2022 to see how this performs. At best I would by a tracker share.
Not a bad idea. 2022 was an excellent test for most funds. There's no rush, and also you don't receive any extra returns for being first into a new fund.
Quick question for the audience about return of capital... I use Charles Schwab, and they seem to just blanket my 1099 with non-qualified dividends even though ETFs like FEPI, SVOL, YieldMax offerings, etc report a portion (or all) of their distributions as ROC. Schwab says they just report based on what the fund company tells them. Has anyone else noticed this with their 1099's? I'm wondering if this is a Schwab problem and it's time to change brokers. I've used them for years but with the issues I've had with them over the last 2 years I've been looking for a reason to switch.
That's a good question. I'm not a tax advisor so I don't know the answer, but for SPYI you can give your accountant the Form 8937 from the NEOS SPYI home page.
Great video I love this new fepi fund so far! I was just wondering if you like the closed end fund USA. It's got a 9.5% dividend and the nav has stayed pretty even over the years. Just wondering if you have done a video on this one or ever owned it?
I don't know about the channel, but I like USA. It's one of my favorite closed end funds. Others I recommend are CSQ, BST, CII, STK, SCD, EOI, & EOS. All winners.
Thanks for your feedback. I have owned USA on and off over the years. I usually buy it when the price is below its historical average vs the NAV (which is the case as I type this) and sell it if the premium goes substantially over the average. The dividends vary a lot so its not ideal for budgeting, but I think its a decent fund overall. I typically only allocated about 1-2% when I hold it.
I'd like to see further recovery from the last correction before I allocate more to FEPI. It's currently approx equal to its launch price. Even if it could hold that price it would still be a good investment.
Another great video! Thansk so much for your thoughtful review. I think you nailed it. We have to see what happens in a down tech market before launching into this fund, as attractive as it might be right now.
Great analysis. High risk, high return, but not as risky (due to covered calls) as just owning these stocks outright. Also, I personally like the ROC (but we won’t know how accurate that is until we get 1099s).
Looking forward to your video on MAXI by Simplify. The expense ratio is absurdly high. Never seen an ETF so expensive. Raises both questions and doubts.
Editing it today :) The expense ratio looks crazy but it's just an accounting regulation that requires the disclosure of interest expense but not the revenue generated by the short term loan. They cancel each other out. A detailed explanation is forthcoming.
Good video. This seems interesting-putting it on the watchlist. It’s below your minimum yield, but I’m a big fan of DIVO. Only 30 stocks, impressive price appreciation, and usually yields around 4.5%, with about half of the income taxed as qualified dividends.
Longtime viewer of your content and we've discussed crypto yield platforms in the past. I wonder if you're doing anything in that space now that the market has reversed a bit?
Hi and thanks for viewing for so long. I dabbled in crypto for a while but after multiple centralized platforms collapsed I stopped investing in it. The lack of regulation and transparency was too stressful for me. The technology is great but I feel more comfortable investing in stocks and funds; it's where I have experience and a greater understanding. I'll review a Bitcoin futures ETF soon but it's not a direct investment in crypto.
FEPI is doing exactly what it was designed to do. It should be more volatile than the NASDAQ 100...and it is. When tech is booming it delivers abnormally good total return and income. When tech is correcting it gets punished. I still hold it but won't take a full position until there's more history to review.
Thanks for your request. I only have time to research and produce videos on investments I'm seriously considering or actually purchasing. QQQY has too much NAV erosion for me to consider. The price only moves down.
Nice that FEPI has capitol appreciation. Only problem is that its expensive share price. So lets say I purchased 30,000 of FEPI, that would give me 547 shares at $1.189002 a share or only 650 a month. If i put that same money in UTLY, 1722 shares at 1.0653 would be 1835 month. So the cap appreciation can no way make up the dif in divs!
If by "DRI" you mean DRIP (auto reinvesting), then the answer is No. I only have a small position in FEPI and I don't DRIP any investments because I like to buy whatever opportunities look most attractive when the income arrives.
@@armchairincomechannel agreed. I'll probably take look at covered call ETFs by the time I retire. Still need to learn how call options work and how to evaluate risk. Thanks for all the good content. Going through your videos for how to properly evaluate stocks for now. 🙂
@@armchairincomechannel trying to. Started a bit late so I have a significant chunk on semicon stocks plus a growth ETF heavy on AI and software. Most of it though are in higher yield divi stocks. Just building it as fast as I can for the next 15 to 20 years.
Great analysis, as always. My thinking is that I want to hold the 15 largest, most heavily traded, American tech companies. Since FEPI actually holds the shares that’s great. I’d also like to write covered calls on those stocks. FEPI does that for me. Even in a downturn I’m not sure I’d sell them. Since FEPI does a rebalancing, all the better. Hopefully the fund managers will do an interview with you. That would definitely give us more insight since you ask smart challenging questions. Thanks for all of your work.
My thoughts exactly, well said. I see the biggest risk being the fund managers getting too aggressive with the calls during a downturn and missing a significant portion of the recovery. That’s always the biggest risk with a CC strategy though.. you own most of the downside with limited upside potential. Still, I think owning the 15 highest volume tech stocks and writing calls against them has a solid chance of beating the market for the foreseeable future. I currently have about a 5% allocation to FEPI. QQQI and BALI are two more I’m building a position in due to their CC strategies and tax-advantaged distributions. I’ll have about 15% of my total portfolio allocated to these high yield funds with the other 85% going to pure growth funds and cash for collateralizing my own conservative options trades. The goal is an overall portfolio yield of 5-7% with total return that’s close to the market with lower volatility thanks to the large cash position and conservative options overlay.
Each to their own. Personally I like to spend my yield on whatever opportunities look best at the time (eg. a new investment idea or something priced well).
I agree, the recovery after a crash is the biggest risk for covered call funds. I assume that covered calls funds won't beat the market but that's ok but I'm not trying to beat the market. I'm trying to achieve a consistent cash flow that grows faster than inflation. Your 5-7% goals sounds very achievable!
The fact that they have matched the index gains in a bull run with total return is pretty great. Most covered call ETFs lag the indexes in total returns during bull runs. This is obviously apples to oranges since only 15 stocks. However I think very promising. The super high yield arguably off sets some of the risk in not having more diversification. I hold this ETF and am happy with it. NAV appreciation, super high yield, doesn't get much better, but to you point time will tell. Again that high yield off sets concerns for me as long as things aren't dividend traps and this certainly isn't. Thanks for the video!
Great content! Been anticipating this one for sure! I have about a 5% position in FEPI. It’s been a great performer since inception. Like you said, we will see how it holds up on the way down and back up through the next correction! Regardless, the fund does exactly what I’d be doing myself with its strategy. I’d rather allocate a small percentage to FEPI, QQQI and BALI and let my growth ETFs run uncapped alongside them. No need to manage 15+ individual options positions every month. The overall portfolio income should continue to grow over the years as the growth funds outrun and are sold to buy more of the income funds.
I am very weary of a company having no previous ETF products. I'd really like to know more about the managers behind this fund, their history, prior accomplishments, accolades etc.
Thanks a lot for great content! I really like FEPI and have 5% position and consider acquiring more. Maybe obvious question: What happens to my holdings if Rex shares goes bankrupt? Do I lose my FEPI holdings or are they kept in a custody account?
FEPI has been great so far but don't forget that we're in the perfect market for this type of fund at the moment so it won't always be like this. During a tech crash it won't be fun! Fund managers are required to keep the fund assets in a separate account so if the business goes BK the fund is not financially compromised.
Thanks a lot for your reply@@armchairincomechannel ! Great to know that I wont lose my positions if REX shares go BR. FEPI has definitely to show us what it does in a recession. I am thinking long term (> 5 years) though and plan DCA on FEPI. As long as I dont lose my shares in case REX goes BR, then I am ok with the risks in the algorithm.
Would be interesting to get your take on the YieldMax and Defiance funds.. such as JEPY and QQQY. They are relatively new, but are paying 30 to 50% dividends on synthetic call options .
➡ Snowball Dividend Tracker (Create a Free Account, and the 10% Discount will appear under "Subscribe"):
armchairincome.link/snow
I recently started a position in FEPI after watching it outperform similar funds over the same period, and will add to it during market weakness.
The numbers are impressive. Adding during market weakness sounds very logical!
Been waiting for this one. It looks so good and with a yield like that I just think it’s too good to be true. No way it stays constant with that distribution.
I agree, those numbers aren't sustainable. Tech growth just happens to be on a tear at the moment so they launched at time that makes them look fantastic. Once the market calms down we'll have a better sense of what this fund will do over the long term. I expect a lot of volatility from the price of this fund; we shall see. Either way, it's an interesting one to keep an eye on.
It's too good to be good. NAV just drops
Selling calls into a bull run is a pretty good indicator of management selection skill, it's really easy to underperform an index if you are too aggressively capping upside.
Yes, it does tell us something about their skill. Keeping up with QQQ is impressive. I'd like to see how it does after a correction as that will also tell us something useful.
Thank you so much Armchair for the detail explanation of the strategy.
My pleasure!
Thanks for the great video. I agree FEPI has some potential, but I'd wait and see its perform in a market correction. Too many covered call funds out there never recover its NAV from a correction.
That's true. There's no substitute for a price and distribution history.
Technology does feel a bit hot. I'm afraid to say REIT's are on sale.
Tech growth has been hot for about 20 years now and is almost always overpriced. I expect that in 10 years, it will still be overpriced and the journey from here to there will be volatile. It's high risk and high reward, but I want to have some exposure to it. The trick is not to have too much!
thanks for doing all the work for us
My pleasure. I think I like researching this stuff more than most people, so I might as well share it instead of keeping it to myself :)
@@armchairincomechannel what do you think about CEFs? Can you look into those for us? Maybe there is something worse to invest in?!
Thanks! I added it to my watchlist for next year, let’s see how they do on a longer period.
There's no rush and we're blessed with an abundance of opportunities :)
Good video about this new income CC ETF. I also would like to see the fund’s manager on your channel. Keep up the good works ! 🤟🤟
Working on it :) Thanks for your feedback!
“Hey look there is Apple and Microsoft appearing in there 4000th etf”
Now that was just golden
LOL. I'm happy to hear that at least 1 person got the joke!
I really don't understand the merits of the critique of this ETF. None of the other "safer" lower yielding funds you alluded to would do ANY better in a market downturn. In fact, the only ones that would/did do fairly well, employ the exact same covered call options as FEPI.
SCHD is a flip-phone era fund that still hasn't recovered even during this current bullrun. Move into the present bro.
I agree that the strategies are similar. The differentiator for this fund is that it's more concentrated. There are pros and cons to concentration.
@@armchairincomechannel on that, you have a good point. It wasn't that long ago that Nvidia was in the toilet.
FEPI is one of the better income ETFs that have come out - but yes tech is looking very overvalued right now so maybe the timing isn't right.
Buy some fngd to hedge against market fall. While collect fepi divi
Every time I say "Tech is overvalued"...the market goes up! I sold Amazon in 2017 because I thought it was overvalued. I suck at market timing! The market, including FEPI, will experience substantial drops but I have no idea when.
I add this one to my group of high earners for some time. Like you I am not all in yet. Maybe one day.
Plenty of risk to consider. Definately one to keep an eye on though!
Always on target. Thanks
Thanks for letting me know. I'll keep aiming, or shooting, or whatever is required to continue the metaphor :)
As an older investor, I will eventually sell out JEPI and go into this fund, I already have small position in it.
2 very different funds. JEPI did well in 2022. FEPI would not have fared well during that period.
@@armchairincomechannel That's the year I bought into JEPI, I should know I still haven't recovered, my cost average is around 58 dollars, I did do a lump sum purchase in the low 60s back in early 2022, and granted it payed an average dividend of .54 but the share price lost value. Per dollar invested and dividend income returned, I would of yielded more return of my investment in FEPI, my last purchase on Jepi, was late 2022 another lump sum when it was trading around 54ish, lately the dividend is nothing to brag about its been in the .30 on average. To anyone who buys JEPI just be aware you get best dividend when the stock tanks, hence why I rather take FEPI to replace JEPI, at least if they both tank in price Ill get a better return on FEPI.
I follow your logic. Thanks for sharing!
I don't understand your reasoning. If you're an older investor you probably should stay with j e p i. it's more conservative than f e p i more value-oriented that did good in 2022. a good core position of j e p i with some more aggressive funds like j e p q and f e p i is the way to go when you're older and retired.
@@leecarignan7714 I plan to retire early, no way Im working to 59,
Excellent video thanks
Glad it was helpful!
Your doing my favorite ETF...FEPI
It's an interesting one!
And update would be good .. now that there”s more history .
An update about FEPI? The video is 2 days old...
@@armchairincomechannel How bout now?
Great video as always
I appreciate your encouragement, thanks!
@@armchairincomechannel do you have a video where you chronicle your retirement journey using this 8% strategy? It would be very interesting to retirered/pre-retirees to learn how you handled the ups and downs of the market and its effects on your portfolio. I appreciate all that you do for us
@@g.ajemian4968 i also second this demand !!
Thanks for the suggestion. At this early state of my channel I'm trying to focus on the stocks rather than me, but as the channel develops I'm open to sharing more about my personal journey.
@@armchairincomechannel understandable, you obviously thought it was a safe enough investment style because you always take a conservative approach to “new shiny objects” that hit the market, which gives me a insight to the strategy. Thanks again
Thanks for the analysis.
4 of your TOP Ten investments are available in Europe. 6 are not:
PBDC, BST, JEPQ, PFFA, JEPI and SPYI are not available to trade for EU retail investors. Same goes for FEPI.
Why don't you make a 'Top Ten' list for your Europe Audience? 🇪🇺
Hi, and thanks for your feedback on the European availability of these funds. I appreciate your suggestion but I don't have access to information about how the European "system" selects which stocks are available. Within the Armchair Income Community there are some Canadian investors that discuss Canada specific income investment topics. Occasionally there's a post in there related to Europe. At some point I'd like to shift from FB to a more advanced Community platform that allows individual chat rooms for specific topics like this...however, the advanced Community platforms are quite expensive and I want to keep the Community free if possible.
@@armchairincomechannel Thanks for the reply! Maybe instead of your 'Top Ten' do a 'Top Twenty'. There would be more businesses for EU Retailers to analyse and choose from.
Thanks again for your Work!
Open an account at a broker with (unlimited) access to the US market and you don't have any issues. Check the offering of Interactive Brokers, one of their numerous introducing broker (e.g. LYNX, CapTrader, swissquote...), of Freedom24 etc.
DO TUGN ETF as well
Not much info available about this fund but it's worth a look. Thanks for the suggestion.
I wonder how you feel after a 12% drop :)) - Aug 2, 2024
I feel like FEPI is behaving exactly as expected...high yield and high volatility. It performs well during rising and flat markets, and falls behind when tech corrects.
Those companies are not available for European investors unfortunately, what a descrimination..
Thanks for sharing that information and sorry to hear that Europe restricts your investments choices.
Yes, so unfair.. In 2016 there was introduced a new regulation (MiFID) which prevents EU retail investors from buying US ETFs and CEFs. You have to!qualify for professional investor in order to have access to those instruments.May I ask you one question in that regard? Do you know if SEC got some protection on the investments on US stocks in case of bankrupcy of a broker like IBKR for non US citizens?
You can purchase american etf selling put options in IBKR
@@sugusyluna its not the same thoe
@@akalapov Of course, they are a purchase of 100
Huge dividend trap, don't fall for it.
I am doing just fine with my NVDY! In your words I am happy I got trapped!
This is not a yieldmax scam, they own the stock and it's indexed. This type of fund was only available to billionaires before. Nothing new.
The vast majority of investments with a yield this high are a dividend trap. I'm more interested to know the "Why". In this case, I'm comfortable with the risks. It's still new but I'm keeping an open mind.
This is the 3rd time I have watched this. So I have decided to (Dabble).
I think that's a compliment :) Thanks for watching (3 times)!
Fepi sells 10% out the money call, does it mean 90% profolio will have the upsides? Sorry my English not good, I'm a 30+ year old man who tries to retire at early age lol😅
10% out of the money means the first 10% of any appreciation above the share price will be captured, and anything above that will not. The percentage of the portfolio that is written against is called the "Overwrite Level" and that's a separate measure.
Your analysis is not quite accurate... per the prospectus: "The Solactive FANG Innovation Index, the benchmark Index for the Fund, includes 15 technology stocks. There are 8 core-components in the Index: Apple (AAPL), Amazon (AMZN), Meta Platforms (META), Alphabet (GOOGL), Microsoft (MSFT), Netflix (NFLX), NVIDIA (NVDA), and Tesla (TSLA). The remaining 7 stocks within the Index are determined by selecting the top traded names..."
It's fixed 8 FANG + 7 top vols. It may just happen the 8 FANG are also top vols stocks, but they may not be.
You make a good point. I found the prospectus confusing. The prospectus strategy calls out 8 stocks by name but the detailed "Index Selection" doesn't. Perhaps they assume that those 8 will continue to qualify per their rules for the long term. There are also some lengthy explanations regarding circumstances under which the components can be changed. I doubt whether those 8 are set in stone. If one of them collapsed in value, I don't think it would remain in the fund just because it appears in the Strategy paragraph.
@@armchairincomechannel In my opinion, I think the "8 FANG" are fixed until they decide to change it for whatever their reason. They could add to the 8, remove from the 8, or swap from the eight... but given these 8 baseline stocks are specifically stated in the prospectus, they would have to provide notice of change in investment philosophy to shareholders. As with most technology stocks, new ones come in (start up, spin offs, etc) and some go away (merger, out of business, buyout).
JEPQ works good on corrections and weak on growths periods because plays with index (less volatility). FEPI works good even on growths periods because write calls with stocks (not index) and they have more volatility. So on corrections I think FEPI will fall down same % as QQQ, but will give 50% more dividends than on growth period (because of volatility). JEPQ will fall 50% less than QQQ and will increase dividends too.
Those dividends could be used to buy QLD on corrections because QLD falling 2 times faster.
Thanks for sharing your analysis!
FEPI looks like a triple threat ETF.
High dividend
Tax advantage
Price appreciation
Am I wrong?
It's doing well on all 3 fronts. Remember that its concentrated in tech stocks so when there's a tech correction, it will take the full hit, then recover more slowly than the NASDAQ 100 because of the covered call limiting the upside.
@@armchairincomechannel Tech is the future. It may have some corrections along the way, but it will probably be the best investment over then next 50 to 100 years.
Meanwhile REX Shares offers 2 CC ETF based on the same approach: *FEPI* (FANG Innovation Equity Premium Income) and *AIPI* (AI Equity Premium Income).
It will be interesting to see if FEPI can continue its fantastic start...and eyes will be on AIPI too!
@@armchairincomechannel I like innovations, financial ones as well. And I'm averse to big players, be it JPMorgan, Goldman Sachs... or Blackrock, Vanguard, Schwab... for the sake of competition 😉 In consequence I contibuted to the NAV/AuM of SVOL, SPYI, FEPI... and others (but not to hyped single stock/high yield ETF). And I intend to do the same with AIPI. Until now my approach has paid off. 💰 Nevertheless I'm aware of the risks of innovations - and have an eye on the trend of NAV and distributions.
Thanks for the video. This is just too new for me to nibble on. We really need another 2022 to see how this performs. At best I would by a tracker share.
Not a bad idea. 2022 was an excellent test for most funds. There's no rush, and also you don't receive any extra returns for being first into a new fund.
That's why you only nibble
Nothing wrong with nibbles. Added to watch list for possible year 2 investment.
3 nibbles equals a bite :)
Quick question for the audience about return of capital...
I use Charles Schwab, and they seem to just blanket my 1099 with non-qualified dividends even though ETFs like FEPI, SVOL, YieldMax offerings, etc report a portion (or all) of their distributions as ROC. Schwab says they just report based on what the fund company tells them. Has anyone else noticed this with their 1099's?
I'm wondering if this is a Schwab problem and it's time to change brokers. I've used them for years but with the issues I've had with them over the last 2 years I've been looking for a reason to switch.
That's a good question. I'm not a tax advisor so I don't know the answer, but for SPYI you can give your accountant the Form 8937 from the NEOS SPYI home page.
Great video I love this new fepi fund so far! I was just wondering if you like the closed end fund USA. It's got a 9.5% dividend and the nav has stayed pretty even over the years. Just wondering if you have done a video on this one or ever owned it?
I don't know about the channel, but I like USA. It's one of my favorite closed end funds. Others I recommend are CSQ, BST, CII, STK, SCD, EOI, & EOS. All winners.
Thanks for your feedback. I have owned USA on and off over the years. I usually buy it when the price is below its historical average vs the NAV (which is the case as I type this) and sell it if the premium goes substantially over the average. The dividends vary a lot so its not ideal for budgeting, but I think its a decent fund overall. I typically only allocated about 1-2% when I hold it.
GOOX! :))
No income and leverage equals a no-go for me but I wish you well with it!
@@armchairincomechannel It was a joke...
Really good video. I’ve been watching your channel for a long time and it’s great.
I appreciate that! Thanks for taking the time to let me know :)
FEPI held up great during the 10% correction with only a 20% drop in price, that recovered already. Good stuff 👏
I'd like to see further recovery from the last correction before I allocate more to FEPI. It's currently approx equal to its launch price. Even if it could hold that price it would still be a good investment.
Another great video! Thansk so much for your thoughtful review. I think you nailed it. We have to see what happens in a down tech market before launching into this fund, as attractive as it might be right now.
Thanks for your feedback and encouragement :)
I completely lost my discipline and jumped in on Friday 😅 QQQI is next!
Great analysis. High risk, high return, but not as risky (due to covered calls) as just owning these stocks outright. Also, I personally like the ROC (but we won’t know how accurate that is until we get 1099s).
Yes, still a few unanswered questions but an interesting one to keep an eye on.
Looking forward to your video on MAXI by Simplify. The expense ratio is absurdly high. Never seen an ETF so expensive. Raises both questions and doubts.
Editing it today :) The expense ratio looks crazy but it's just an accounting regulation that requires the disclosure of interest expense but not the revenue generated by the short term loan. They cancel each other out. A detailed explanation is forthcoming.
It's never gone up... it just goes DOWN.. whats all the fuss???
FEPI moves up and down like any other stock or fund.
Good video. This seems interesting-putting it on the watchlist. It’s below your minimum yield, but I’m a big fan of DIVO. Only 30 stocks, impressive price appreciation, and usually yields around 4.5%, with about half of the income taxed as qualified dividends.
Yes, DIVO is a popular one and has delivered decent returns since inception. As you said, I prefer a more income focused approach.
Longtime viewer of your content and we've discussed crypto yield platforms in the past. I wonder if you're doing anything in that space now that the market has reversed a bit?
Hi and thanks for viewing for so long. I dabbled in crypto for a while but after multiple centralized platforms collapsed I stopped investing in it. The lack of regulation and transparency was too stressful for me. The technology is great but I feel more comfortable investing in stocks and funds; it's where I have experience and a greater understanding. I'll review a Bitcoin futures ETF soon but it's not a direct investment in crypto.
It is now late April and FEPI took a big drop - any thoughts now on the investment?
FEPI is doing exactly what it was designed to do. It should be more volatile than the NASDAQ 100...and it is. When tech is booming it delivers abnormally good total return and income. When tech is correcting it gets punished. I still hold it but won't take a full position until there's more history to review.
Video about defiance etfs like qqqy or iwmy and their risks consisting of banktrupcy please.
Thanks for your request. I only have time to research and produce videos on investments I'm seriously considering or actually purchasing. QQQY has too much NAV erosion for me to consider. The price only moves down.
Is there any the banktrupcy risk or it will only cut dividends during a crisis like qdpl?
FEPI holds 15 stocks. It would only go bankrupt if the value of those 15 stocks went to zero...I don't see that happening.
Nice that FEPI has capitol appreciation. Only problem is that its expensive share price. So lets say I purchased 30,000 of FEPI, that would give me 547 shares at $1.189002 a share or only 650 a month. If i put that same money in UTLY, 1722 shares at 1.0653 would be 1835 month. So the cap appreciation can no way make up the dif in divs!
I'm not aware of a stock or fund called "UTLY".
@@armchairincomechannel sorry, ULTY
Great video question are you DRI your FEPI
If by "DRI" you mean DRIP (auto reinvesting), then the answer is No. I only have a small position in FEPI and I don't DRIP any investments because I like to buy whatever opportunities look most attractive when the income arrives.
10 seconds in... Double-digit yield? Big red flag... 🙂
Absolutely! However, they were fortunate to launch a concentrated tech fund during a tech boom, so I assume those numbers will normalize over time.
@@armchairincomechannel agreed. I'll probably take look at covered call ETFs by the time I retire. Still need to learn how call options work and how to evaluate risk. Thanks for all the good content. Going through your videos for how to properly evaluate stocks for now. 🙂
Thanks for sharing. Sounds like you're on track for financial independence.
@@armchairincomechannel trying to. Started a bit late so I have a significant chunk on semicon stocks plus a growth ETF heavy on AI and software. Most of it though are in higher yield divi stocks. Just building it as fast as I can for the next 15 to 20 years.
Double digit yields are normal for Covered Call ETFs.
What would fepi look like in a recession
🤔🤔🤔🤔
It would look like the average of the 15 tech stocks in its portfolio. If they were to correct by say, 25%, then FEPI would do the same.
@@armchairincomechannel 😳
Great analysis, as always. My thinking is that I want to hold the 15 largest, most heavily traded, American tech companies. Since FEPI actually holds the shares that’s great. I’d also like to write covered calls on those stocks. FEPI does that for me. Even in a downturn I’m not sure I’d sell them. Since FEPI does a rebalancing, all the better. Hopefully the fund managers will do an interview with you. That would definitely give us more insight since you ask smart challenging questions. Thanks for all of your work.
Seems like a great etf to DCA and drip the yield too?
My thoughts exactly, well said.
I see the biggest risk being the fund managers getting too aggressive with the calls during a downturn and missing a significant portion of the recovery. That’s always the biggest risk with a CC strategy though.. you own most of the downside with limited upside potential. Still, I think owning the 15 highest volume tech stocks and writing calls against them has a solid chance of beating the market for the foreseeable future.
I currently have about a 5% allocation to FEPI. QQQI and BALI are two more I’m building a position in due to their CC strategies and tax-advantaged distributions. I’ll have about 15% of my total portfolio allocated to these high yield funds with the other 85% going to pure growth funds and cash for collateralizing my own conservative options trades.
The goal is an overall portfolio yield of 5-7% with total return that’s close to the market with lower volatility thanks to the large cash position and conservative options overlay.
Thanks for your feedback. We're' on the same page :) I'm keeping an open mind on this one.
Each to their own. Personally I like to spend my yield on whatever opportunities look best at the time (eg. a new investment idea or something priced well).
I agree, the recovery after a crash is the biggest risk for covered call funds. I assume that covered calls funds won't beat the market but that's ok but I'm not trying to beat the market. I'm trying to achieve a consistent cash flow that grows faster than inflation. Your 5-7% goals sounds very achievable!
The fact that they have matched the index gains in a bull run with total return is pretty great. Most covered call ETFs lag the indexes in total returns during bull runs. This is obviously apples to oranges since only 15 stocks. However I think very promising. The super high yield arguably off sets some of the risk in not having more diversification. I hold this ETF and am happy with it. NAV appreciation, super high yield, doesn't get much better, but to you point time will tell. Again that high yield off sets concerns for me as long as things aren't dividend traps and this certainly isn't. Thanks for the video!
I agree with your perspective. This isn't a basket to put all your eggs into, but still an interesting basket.
Great video!
Glad you enjoyed it
Great content! Been anticipating this one for sure!
I have about a 5% position in FEPI. It’s been a great performer since inception. Like you said, we will see how it holds up on the way down and back up through the next correction!
Regardless, the fund does exactly what I’d be doing myself with its strategy. I’d rather allocate a small percentage to FEPI, QQQI and BALI and let my growth ETFs run uncapped alongside them. No need to manage 15+ individual options positions every month. The overall portfolio income should continue to grow over the years as the growth funds outrun and are sold to buy more of the income funds.
Thanks for your perspective. I don't have the time or inclination to write covered calls myself either.
I am very weary of a company having no previous ETF products. I'd really like to know more about the managers behind this fund, their history, prior accomplishments, accolades etc.
Me too. If they'll agree to an interview, we could learn a lot.
@@armchairincomechannelhave you reached out to them? The CEO seems eager to talk about their products. Thanks for the video BTW!
Thanks a lot for great content! I really like FEPI and have 5% position and consider acquiring more.
Maybe obvious question: What happens to my holdings if Rex shares goes bankrupt? Do I lose my FEPI holdings or are they kept in a custody account?
FEPI has been great so far but don't forget that we're in the perfect market for this type of fund at the moment so it won't always be like this. During a tech crash it won't be fun!
Fund managers are required to keep the fund assets in a separate account so if the business goes BK the fund is not financially compromised.
Thanks a lot for your reply@@armchairincomechannel ! Great to know that I wont lose my positions if REX shares go BR. FEPI has definitely to show us what it does in a recession. I am thinking long term (> 5 years) though and plan DCA on FEPI. As long as I dont lose my shares in case REX goes BR, then I am ok with the risks in the algorithm.
Anyone know where to find the 2023 1099-DIV on their website? Fidelity is showing their distributions as ordinary dividends, not ROC.
I couldn't find a tax form that definitively shows the 2023 ROC; sent them an email...
Dude, THIS is the channel for me.
That's great to hear! Thanks for letting me know :)
Would be interesting to get your take on the YieldMax and Defiance funds.. such as JEPY and QQQY.
They are relatively new, but are paying 30 to 50% dividends on synthetic call options .
He has. He interviewed Jay P summer 2023.
I don't hold any of them due to NAV decay. I interviewed Jay from Yieldmax as Joinjen3854 mentioned....I like Jay but Yieldmax isn't for me.