The ETF JEPI has emerged as a more defensive investment compared to the tech-heavy S&P500 index, particularly in the current interest rate environment. JEPI’s underexposure to high-beta technology stocks and overexposure to equity-linked notes make it better suited for a weak to sideways market.
A slowdown in the Fed’s expected pace of rate cuts in 2025 will also negatively impact long-duration technology growth stocks, further solidifying JEPI’s favorable position. On the other hand, the tech-heavy mix of SPY carries more risk due to potential correction moves triggered by the Fed’s rate policy changes.
However, JEPI’s valuations are at a mild 9% discount compared to SPY, but the relative technicals have yet to show a strong bullish signal despite reaching a key support level. A counterpoint comes from expected tech spending boom by enterprises in 2025, which could benefit S&P500 stocks like VOO.
As an author with a beneficial long position in VOO and adhering to Seeking Alpha’s disclosure policies, this article expresses my own opinions without compensation or affiliation. Always consult with financial experts before making investment decisions, as past performance is not a guarantee of future results.
Source: https://seekingalpha.com/article/4745823-jepi-good-hedge-vs-tech-heavy-sp500-in-current-rates-environment