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0:00 Covered call funds based on the NASDAQ 100 are a pretty good deal. You get a yield in the 10 to 14% range paid monthly and potentially some upside if the NASDAQ 100 continues to appreciate in value. Today we'll compare how three funds in the sector negotiated a recent bump in the road. The April tariff chaos. One of them got left behind. These three covered call funds appear similar at first. Their portfolios are all based on the NASDAQ 100 and they all sell call options to generate income so they can pay these high yields. The newest of the three QQQI was launched at
0:46 the end of January 2024. And since that date, these funds have tracked each other very closely for total return. That changed in May of 2025 when Jeep Q fell away. And that's a good excuse for an update on these popular ETFs. Let's start with the oldest one. JP Morgan's JPE Q has been around since May of 2022. And of course, 2022 was the worst year for the NASDAQ in the past decade. It wasn't all bad, though, because the single highest distribution in Jeep Q's history to date took place in November of 2022. If you like consistent income, Jeep Q might not be your cup of tea. It varies the most of the three. Next is
1:34 Goldman Sachs's GPI or GBIQ, which was launched a year and a half later in October of 2023. The income is far more consistent. Then there's the baby of the bunch, QQQI from Neos. It's been around since January 2024 and is also quite consistent with its distributions. Snowball is handy for distribution charts like this, but I mostly use it to combine my stocks from three brokerages into one dashboard. I can rank by yield to see how I want to rebalance my portfolio. And the calendar function lets me see how many dollars will arrive on any given day of the month. Link in the description for a free trial and a discount. Let's revisit that total return chart for a moment. Three similar
2:20 funds tracking each other closely. Then JEPQ fell away in May. The timeline begins on January 30, 2024 because that's when the newest of the three QQQI was launched. By the way, if you're new to the channel, I retired in 2017. And that's when I got serious about researching my investments in greater depth. And this channel is where I share what I learn. I mostly focus on stocks and funds paying consistent yields of 8 to 12% although QQQI is closer to 14%. If you'd like a copy of my portfolio, it's available via armchair insider link in the description. It's free. Continuing with total return, the second newest GPI was launched on October 24,
3:06 2023. So, let's go back a few months before QQQI was launched to compare GPIC and Jeep Q. Now, we can see that GPIC got off to a better start, held its lead, and then the lead widened in May of 2025. Now, this information is very interesting to me because I've been holding Jeep Q and QQQI to see if one strategy works better than the other. I've also been wondering if GPIC got off to a lucky start as Goldman is the newest of the three fund managers to the covered call index space. You can probably guess the conclusion I've come to, but first let's briefly cover the differences between these three funds. There's a big gap between GPIX yield and
3:55 QQQI yield, roughly 4%. But as we saw before, their performance is close to identical. GPI's returns have been more weighted to price appreciation and QQQIS have leaned more towards income. For stock selection, the differences are subtle. QQQI strictly mirrors the NASDAQ 100. NEOS's specialty is options. They don't try to pick stocks. GPIC has the latitude to adjust the waitings from those of the NASDAQ 100, but eyeballing the holdings, they look identical or close enough. Jeep Q on the other hand definitely does change the waitings. They're still choosing from the NASDAQ 100, but this snapshot of the larger
4:40 holdings shows they're slightly heavier on Apple and AV than NASDAQ and lighter on Nvidia and Microsoft. I skipped Alphabet because they're heavier on class C and lighter on class A and that gets confusing. If JEPQ was outperforming the other two funds, their active management of the stocks could be their edge, but that hasn't been happening, at least not lately. NASDAQ stocks pay little to no income. So, almost all of those juicy yields come from selling calls. They get paid a fee to give up the rights to a portion of the upside of the NASDAQ. If you're not familiar with how those work, I'll link to this video in the description that explains it. JEPQ outsources the covered calls to a variety of banks using equity
5:27 linked notes or ELNs. These are more complicated than regular options and they're opaque meaning we can't see the details of each call that the bank sells. So this requires trust in JP Morgan management to oversee that process. GPIC and QQQI use a more conventional approach. They sell calls on the NASDAQ 100 index. NEOS is by far the most transparent. You can see which calls they sold on their website, the dates and the strike prices. For some additional insight, I contacted Garrett Pala, the fund manager at NEOS. His feedback on the 2025 April chaos was that when the market corrected, they maintained their call positions in anticipation of a bounce back. And when
6:14 the market rebounded but volatility was still high, they wrote new options at higher prices but on less of the fund about 50 to 60%. That allowed the portfolio to capture more upside as it rode the recovery back up. I don't know the fund managers at JP Morgan or Goldman or at least not yet. The Goldman Sachs website was more challenging. I couldn't find specifics on which options they trade. Their perspectus says they sell calls on an ETF that tracks an index, presumably the NASDAQ 100. Regarding tax, Jeep Q is by far the least tax efficient. It distributes ordinary income. GPIX prospectus says it distributes ordinary income and capital
7:01 gains. And in another section, it says it may distribute return of capital. The actual tax treatment will vary every year as it depends on the gains or losses generated by the value of the stocks and call options moving in opposite directions. Most investors want return of capital because no tax is due until or even if you sell at which point the return of capital lowers your cost basis and the tax due is calculated as capital gain rather than ordinary income. I searched through the 2024 financial statements and GPIC provided these numbers on page 26. I added the ordinary income and return of capital amounts together and return of capital was 77.8% of the total amount. It was
7:48 far more straightforward for NEOS. Those NDX calls that NEOS uses are index options. So they qualify as 1256 contracts which generates tax efficient income much of which is treated as return of capital. The NEOS website provides an 8937 tax form that quoted 98.2% return of capital for 2024. So for 2024 QQQI was the most tax efficient. The operating expenses favor GPIC at just 0.29%. Although if you read the summary perspectus, they have the option to increase that to 0.35% in April of 2026. A quick word on expenses because I see some investors get kind of emotional about them as if
8:34 their cell phone provider just increased the fees on their phone bill. The expense ratio is a disclosure. It's not a bill that you actually pay. All operating expenses are deducted before the yield is calculated. If two funds delivered the same total return, but one ran at a higher expense ratio, that means the one with the higher expense ratio generated a higher return in order to pay for those expenses. So a higher expense ratio doesn't mean you pay more. You don't actually pay anything. The higher the expenses, the higher the return the fund has to generate to cover those expenses. Before Jeep Q came along, QYLD was the most popular covered core fund
9:20 in this space and still has over $8 billion of assets under management and a juicy yield of more than 13%. If you hold QYLD, I suggest taking a look at this chart. QYLD can't keep up because it sells calls at the money on 100% of its portfolio. If you want a more detailed explanation, I'll link this video because it breaks it down. I'm not going to cover every competitor, but there's one more that's worth a mention. QDVO is slightly less than a year old as I record this, and it's much much smaller at only $140 million assets under management, but it's off to an impressive start. It's not a direct competitor because it's not based on the
10:06 NASDAQ 100 per se, but its growth selection criteria leads to a portfolio focused on many of the largest NASDAQ 100 stocks. It's also more concentrated than the funds we've looked at today that hold 100 stocks. QDVO currently holds half that number. Its early success may be because it's weighted more heavily towards Mag 7 stocks like Nvidia. I don't know, but I'll keep an eye on it. If you'd like to learn more about this relatively new QDVO ETF, Steven Furillo provides a good overview in this article on Seeking Alpha he posted on July 21st. It explains QDVO strategy in more detail. He's quite bullish on it. I also noticed in the comments that QDVO only paid out a small
10:53 amount of return of capital last year. The comments sometimes contain useful nuggets. I'll link to that article, which I suggest reading if you're considering buying QDVO, and I'll also include a link for a free trial and a discount. I use the premium level of membership. Generally, I don't like to rush into new funds, but it's a good thing to see more competitors entering the space. There's never been a better time to be an income investor. JEPQ is by far the biggest fund in this space and of these three it has the longest history. It's managed by JP Morgan, a reputable manager. During the tariff chaos, it was increasing its distributions. There were plenty of
11:40 reasons to hold this high yielding fund, but the recent performance has changed my opinion. I don't know the specific reasons for the lagging performance. I suspect that GPIC and QQQI managing their options inhouse gave them the flexibility to adapt to the volatility in April. Add to this that QQQI and GPIC are more tax efficient than Jeep Q, and I'm struggling to find a reason to continue holding Jeep Q. As for QQQI versus GPIC, their performance thus far has been too close to call. However, I do prefer QQQI's transparency. You can always find their current holdings, including their option positions on their website. Given
12:27 all this information, I'm moving funds from Jeb Q to QQQI, and I'll continue to keep an eye on GPIC. These videos take a while to produce, so the best way to see my current portfolio is Armchair Insider. If you'd like a detailed breakdown of how QQQI uses options to generate all that income, click here for an interview I did with the fund manager, Garrett. That wraps it up for this look at three NASDAQ 100 covered call funds. More armchair income coming soon. [Music]
