GPIX vs. JEPI: Why Goldman's Covered Call ETF Outperforms J.P. Morgan's in Income and Total Returns

In the crowded landscape of income-generating ETFs, two prominent players-Goldman Sachs' Covered Call ETF (GPIX) and J.P. Morgan's Equity Premium Income ETF (JEPI)-have drawn significant attention. While both aim to deliver market exposure with enhanced yield, their structural and tax differences have led to divergent outcomes. As of November 2025, GPIX has outperformed JEPI in total returns, income strategy efficiency, and tax transparency, making it a more compelling choice for investors prioritizing after-tax gains and risk-adjusted performance.

Performance: GPIX's Edge in Returns and Risk-Adjusted Metrics

Over the past year, GPIX has delivered a year-to-date return of 15.71%, nearly double JEPI's 7.86%. This gap widens when considering risk-adjusted metrics: GPIX's Sharpe ratio (0.66) and Sortino ratio (1.04) far exceed JEPI's 0.19 and 0.37, respectively. While JEPI boasts lower volatility (2.16% vs. GPIX's 2.51%), its maximum drawdown of -13.71% is less severe than GPIX's -17.50%. However, GPIX's higher returns and superior Sharpe ratio suggest its strategy better balances risk and reward.

Income Strategy Efficiency: Covered Calls vs. Equity-Linked Notes (ELNs)

The core divergence lies in their income-generating mechanisms. GPIX employs a traditional covered call strategy, selling call options on its underlying S&P 500 holdings to generate premium income. In contrast, JEPI relies on equity-linked notes (ELNs), synthetic instruments that mimic equity exposure while capturing option premiums.

This structural difference impacts income stability. Covered-call ETFs like GPIX typically offer more predictable distributions, as they derive income from tangible option premiums. JEPI, however, has experienced months with distribution declines exceeding 20%, reflecting the inherent complexity of ELN-based strategies. For instance, in 2024, JEPI's yield dipped sharply amid market volatility, while GPIX maintained a steadier payout.

Tax Transparency: Return of Capital vs. Ordinary Income

Tax treatment is where GPIX's advantage becomes most pronounced. Distributions from GPIX are primarily classified as return of capital, which reduces an investor's cost basis without triggering immediate tax liability. In contrast, JEPI's ELN structure results in distributions taxed as ordinary income, subject to higher tax rates for investors in top brackets (https://www.dividendology.com/p/which-covered-call-etf-is-truly-winning).

This distinction has tangible implications. For a taxpayer in the 25% bracket, a similar covered-call ETF (SPYI) demonstrated $7,710 in tax savings compared to JEPI over a hypothetical investment period. While GPIX's dividend yield (8.04%) is slightly lower than JEPI's 8.87%, its ROC classification allows investors to defer taxes, effectively boosting after-tax returns.

The Bigger Picture: Why Strategy Matters

JEPI's ELN-based approach may appeal to investors seeking synthetic equity exposure, but its tax inefficiency and distribution instability undermine its income proposition. GPIX's covered call strategy, though not without risks (e.g., capping upside potential in bullish markets), offers greater transparency and tax efficiency. This aligns with broader trends in 2025, where investors increasingly prioritize after-tax returns amid elevated interest rates and regulatory scrutiny of complex derivatives.

Conclusion

Goldman Sachs' GPIX has emerged as a superior choice for income-focused investors due to its higher total returns, more stable income strategy, and tax-advantaged structure. While JEPI's lower volatility and brand recognition are appealing, its reliance on ELNs introduces tax complexity and distribution unpredictability. As markets continue to navigate a high-yield environment, GPIX's combination of performance and tax efficiency positions it as the more strategic option for long-term income portfolios.