JEPI vs. VOO

JEPI vs. VOO: Which is the Better ETF to Hold?

As the market fluctuates up and down, people tend to look at different strategies to maximize the value of their dollars. Some people prefer long-term capital appreciation, while others like near-term income. This article will compare and contrast JEPI vs. VOO as potential ETF investments.

The Vanguard S&P 500 ETF (VOO) is great for grabbing growth. At the same time, the JP Morgan Premium Equity ETF (JEPI) is primed to give investors significant dividends for their retirement portfolios

So, which ETF is better to hold in your portfolio? Who will win out? VOO vs. JEPI? These are questions people consider when formalizing their portfolios. Let’s break down their holdings methodology and see which one is better. 


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The Vanguard S&P 500 ETF (VOO)

The Vanguard S&P 500 ETF (VOO) is one of the largest ETFs on the market and tracks the S&P 500 Index. It competes with SPDR S&P 500 Trust (SPY) and other ETFs like the iShares Core S&P 500 ETF (IVV) to grab the lion’s share of S&P 500 ETF assets. 

However, VOO could be the way to go if you want a long-term investment. It has a long track record since it was created in 2010 as an ETF version of Vanguard’s famous VFIAX index fund, the second largest mutual fund by assets. The low expense ratio of 0.03% makes it a very low-cost fund to add to your portfolio. It costs $3 for every $10,000 invested, making it one of the cheaper ETFs on the market.

The dividend is low at 1.47%, but dividends are not the focus if you are a long-term investor. The focus would be the growth of your money, and over the long term, the S&P 500 has averaged ~10% with 2% to 3% reduced due to inflation, giving around a 7% average return. 

That is great compared to other investment vehicles.

Holdings in VOO

VOO invests in the biggest 500 companies on the U.S. stock market, giving value and a future outlook. These companies are Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG, GOOGL), Nvidia (NVDA), etc. It gives investors a broad, diversified portion of the market. 

The fund owns 507 holdings across all 11 sectors and many industries. The assets under management (AUM) across all share classes is approximately $851.8 billion, making this ETF one of the five largest.

VOO has significant assets in the Information Technology (28.10%), Healthcare (13.20%), and Financials (12.70%) sectors. Investments in these three growth sectors total more than half the holdings at roughly 54%. Consumer Discretionary and Communication Services complete the top five sectors. 

The ETF tends to own mega-cap and large-cap stocks, especially growth companies. However, it holds smaller market capitalization equities in the S&P 500. The fund’s top 10 stock weightings change only by a small amount each month.

The top 10 holdings of VOO:

TickerCompanyWeighting (%)
MSFTMicrosoft7.10%
AAPLApple7.09%
AMZNAmazon3.42%
NVDANvidia2.85%
GOOGLAlphabet, Class A2.08%
METAFacebook1.89%
GOOGAlphabet, Class C1.79%
BRK.BBerkshire Hathaway, Class B1.76%
TSLATesla1.57%
UNHUnitedHealth Group1.40%
Source: Vanguard website (as of October 31, 2023)

The top 10 holdings make up about 30.95% of the fund.

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JP Morgan Premium Equity ETF (JEPI)

JP Morgan Equity Premium Income ETF (JEPI) is the new kid on the block, allowing many people to receive dividends. It can be an excellent ETF to add to a Roth IRA, creating tax-free dividends for your portfolio. Unlike VOO, it is actively managed.

With a year-to-date dividend yield of ~8.66%, this ETF can help produce a significant dividend income stream for those coming closer to retirement or looking for more income-producing assets to add to their portfolio. It also comes with an expense ratio of 0.35%, costing $35 for every $10,000 invested.

JEPI is not an old ETF; it is fresh on the market and was launched in May 2020. It is hard to determine whether the extended returns will be good, but it creates income for those looking for more of an income producing asset instead of waiting for capital growth. 

JEPI sells out-of-the-money call options on large-cap companies held in the S&P 500 Index to create income for its investors. As the market dips, it will be able to generate more income. When the market starts to climb, it will make less income. That is the trade-off with having a long-term approach versus one that creates near-term income. 

Holdings in JEPI

JEPI focuses on about 100 companies that are older, stable, and little affected by market instability, like some of the top companies. These companies are AbbVie (ABBV), PepsiCo (PEP), Coca-Cola (KO), etc. They are defensive and help to reduce the risk. 

The AUM is approximately $30.49 billion, making JEPI much smaller than VOO. The ETF owns all 11 sectors, but the weightings emphasize other sectors besides Information Technology. The top three sectors are Information Technology (14.6%), Financials (13.7%), and Healthcare (11.6%). The fourth and fifth sectors are Industrials and Consumer Staples. The top three sectors have around 39.9% of total assets.

The JEPI ETF owns 132 value and growth stocks, including many equities popular with retail investors and some lessor known ones. The fund does not make big bets on any single equity. The stocks in the top 10 change relatively quickly, with a 12-month turnover ratio of 190%.

The top 10 holdings of JEPI:

TickerCompanyWeighting (%)
MSFTMicrosoft1.67%
AMZNAmazon.com1.64%
PGRProgressive1.62%
ADBEAdobe1.61%
TTTrane Technologies1.59%
INTUIntuit1.56%
MAMastercard1.53%
CANAccenture1.51%
VVisa1.47%
UNHUnitedHealth Group1.42%
Source: JP Morgan website (as of December 11, 2023)

The top 10 holdings make up about 15.62% of the fund.

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Similarities: VOO vs. JEPI 

VOO and JEPI have different objectives but have a few similarities. Both are suitable ETFs to hold depending on an investor’s goal.

  • Low-cost ETFs.
  • Owns stocks in the S&P 500 Index.
  • Overlap in the top five sectors and top 10 stocks.

Although they have a few similarities, the differences between JEPI and VOO will help to determine the best ETF to consider.

Differences: JEPI vs. VOO 

Choosing between VOO or JEPI is a difficult choice. They have few similarities and are very different. These variations may help to decide between the two ETFs. Some obvious differences would be:

  • The expense ratio of VOO is 0.03%, and JEPI is 0.35%.
  • VOO has 507 holdings. JEPI has 132 holdings.
  • VOO has $851.8 billion in assets. JEPI has $30.49 billion in assets. 
  • VOO has a yield of 1.47%, and JEPI has a yield of 8.66%.
  • Different benchmark indexes and goals.
  • Tracks an index versus actively managed.

When comparing JEPI vs. VOO, they have differences because of their strategies, benchmarks, and holdings. The JEPI ETF has a higher yield, greater cost, and fewer assets. But, VOO is growth-oriented.

TickerVOOJEPI
NameVanguard S&P 500 ETFJPMorgan Equity Premium ETF
IndexS&P 500 IndexActively Managed
Number of Stocks507132
Expense Ratio0.03%0.35%
Price$424.64$54.73
30-Day SEC Yield1.47%8.66%
P/E Ratio21.2X19.53X
Total Assets$851.8B$30.49B

The Growth of JEPI vs. VOO

JEPI and VOO have grown since they hold stocks in the S&P 500 Index. JEPI’s holdings are a bit more conservative to reduce risk, and their returns will not have the high returns of VOO, but the companies will also not typically have massive drops like VOO. You can see this in the history of the two ETFs. In 2021, VOO rose to 28.78%, while JEPI rose 21%. With a down year like 2022, VOO was down 18% while JEPI was down a little over 3%, and then in 2023, you see VOO is above 20% while JEPI is only up to a little over 7%. 

These ETFs are different in how they are structured, with VOO seeing many more highs and lows than the risk-reducing portfolio of JEPI. 

The Dividend of JEPI vs. VOO

Some investors look for growth, and those are more interested in dividends and the income produced. JEPI and VOO pay dividends but have different yields because of how the funds are structured. 

As VOO has had many more tech companies rise to the top, their dividends have shrunk in yield. It has gone from around 2% in the 2010s to approximately 1.50% in the 2020s. This change means that the companies at the top of VOO are more focused on using their income to grow the company instead of giving their stockholders a share of the profits through dividends. 

JEPI, on the other hand, uses option selling to help create a yield on its holdings. The JEPI ETF has only existed since 2020, but its yield has grown from about 5% to over 11% in 2022 and back down to around 8%. The fund’s holdings tend to be more stable than growth companies, which allows these firms to give a portion of their profits back to the shareholders. 

Portfolio Composition

The two ETFs invest in the same 11 sectors and many stocks because they own ones in the S&P 500 Index. However, comparing JEPI vs. VOO, the weightings differ for the overall portfolio compositions.

SectorVOOJEPI
Basic Materials2.4%3.0%
Consumer Discretionary10.6%7.4%
Consumer Staples6.6%10.7%
Energy4.5%2.5%
Financials12.7%13.7%
Healthcare13.2%11.6%
Industrials8.3%11.6%
Real Estate2.4%3.0%
Information Technology28.1%14.6%
Telecommunications8.7%4.0%
Utilities2.5%4.2%
Source: Vanguard and JPMorgan websites (as of October 31, 2023, and December 11, 2023)

The Future of Your Portfolio

When looking at JEPI vs. VOO, these two ETFs come with different perspectives when creating your portfolio. If you are a young person in your 20s and 30s looking at a long-time horizon, VOO may be the best ETF in your portfolio. The market usually continues to rise over the years to decades. The market does fall now and then, but with new companies coming on the scene and the American workforce, it is hard to deny the wisdom of investing in the largest 500 companies with VOO. 

If you are getting closer to retirement and need more income, like dividends, JEPI would be a better ETF. It comes with a higher dividend yield but less growth than VOO. An investor would like to rely on stable income in the long run as the market increases. The high dividend yield of JEPI can give peace of mind to those investors. 

Final Thoughts on JEPI vs. VOO

Each investor has different goals, risk tolerance, and strategies, so JEPI and VOO can work in many different types of portfolios. JEPI focuses more on income, and VOO focuses more on the top 500 US growth companies. The choice is yours when determining which ETF to select.

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Steve Cummings is the founder of the personal finance blog The Frugal Expat. As a traveler and expat, he has learned a lot about how to save money, live frugally, and invest for the future. His mission is to help people in saving, investing, reaching financial independence, and traveling.

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