JPMorgan’s Smash-Hit ‘Income’ ETF Seen Battling Off Bond Market

One of the biggest hits in the $6.6 trillion exchange-traded fund industry last year has a worthy opponent in 2023: the bond market.

Steady income streams were in high demand last year as volatility reverberated across asset classes this past year, fueled by the worst inflation in a generation and the Federal Reserve’s efforts to cool it. That powered a wave of payout-oriented fund launches, and funneled billions into the likes of the JPMorgan Equity Premium Income ETF (ticker JEPI), whose nearly $13 billion haul shattered the annual record for active ETF inflows, Bloomberg Intelligence data show.

Now, with yields approaching 4% on Treasuries and 5% for blue-chip corporate debt, the calculus for many money managers has shifted in favor of bonds over equities as recession fears grow and Wall Street warns of a coming reckoning for corporate earnings. But while higher yields may cool momentum for JEPI, the fund’s premise of investing in stocks that maintain their relative price should continue to stoke investors’ appetite, according to Strategas Securities.

“There’s an argument for the income competition — maybe I don’t need to put the bulk of my income sleeve to JEPI,” said Todd Sohn, ETF strategist at Strategas. “But if I must have equity exposure, there’s likely still a tilt there because of the low volatility profile.”