Covered Call ETFs: Why GPIQ Outperforms JEPQ and Emerges as a Superior Long-Term Buy

In the crowded landscape of income-focused exchange-traded funds (ETFs), the Goldman Sachs Nasdaq-100 Premium Income ETF (GPIQ) and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) stand out as two of the most prominent covered call strategies tied to the Nasdaq-100 index. While both aim to generate income by selling call options on the index, their divergent approaches to options strategy, volatility management, and expense efficiency have led to starkly different performance outcomes over the past five years. For investors seeking a long-term, tax-efficient vehicle to participate in the Nasdaq-100's growth while generating income, GPIQ has consistently outperformed JEPQ, making it the superior choice.

Strategic Differentiation: ATM vs. OTM Covered Call Approaches

The core distinction between GPIQ and JEPQ lies in their options strategies. GPIQ employs an active at-the-money (ATM) covered call approach, dynamically adjusting the portfolio's upside exposure to balance income generation and capital appreciation according to ETF comparisons. By selling ATM calls-options with strike prices near the current index level-GPIQ captures premium income while retaining more upside potential during market rallies. In contrast, JEPQ relies on out-of-the-money (OTM) covered calls, which involve selling options with strike prices above the current index level. While OTM strategies can enhance income in stable markets, they inherently cap gains during significant upswings as research shows.

This strategic divergence explains GPIQ's superior performance during the Nasdaq-100's rebound from a 2025 low. Over a one-year period, GPIQ delivered a 19.77% return, outpacing JEPQ's 15.18% according to performance data. The ATM strategy's ability to retain more upside during rallies is further supported by broader studies, which suggest that ATM options can enhance returns in volatile markets by allowing partial participation in price appreciation according to Morningstar analysis.

Performance Metrics: A Tale of Two ETFs

The performance gap between GPIQ and JEPQ becomes even more pronounced over the five-year period from 2020 to 2025. Including dividend reinvestment, GPIQ achieved a total return of 69.45%, compared to JEPQ's 61.96% according to total return data. This translates to a $10,000 investment growing to $16,945 in GPIQ versus $16,196 in JEPQ. Meanwhile, JEPQ's five-year total return CAGR was effectively 0%, a stark contrast to GPIQ's consistent outperformance as performance tools indicate.

Volatility also plays a role in this dynamic. GPIQ's daily standard deviation of 21.14% is slightly higher than JEPQ's 19.19%, but the additional risk is justified by its superior returns according to comparative analysis. For long-term investors, the trade-off between modestly higher volatility and enhanced upside capture aligns with the principles of risk-adjusted returns.

Cost Efficiency and Tax Considerations

While both ETFs share the same 0.35% expense ratio according to ETF data, GPIQ's lower expense ratio of 0.29% (as noted in some sources according to performance tools) provides a marginal edge in long-term tax efficiency. Over time, even small differences in fees can compound significantly, particularly in tax-advantaged accounts. Additionally, GPIQ's active options strategy reduces the frequency of capital gains distributions, enhancing its tax efficiency compared to JEPQ's more frequent option-writing activity as ETF guides explain.

The Covered Call Trade-Off: Income vs. Growth

Critics of covered call strategies often argue that they underperform buy-and-hold benchmarks during strong bull markets according to valuation research. However, GPIQ's dynamic ATM approach mitigates this risk by adapting to market conditions. For instance, during periods of high volatility, GPIQ's active strategy can reduce options coverage to preserve upside potential, whereas JEPQ's OTM approach remains rigidly structured as strategy analysis shows. This flexibility has allowed GPIQ to outperform not only JEPQ but also traditional Nasdaq-100 ETFs like QQQ during key market inflection points according to Morningstar reporting.

Conclusion: A Long-Term Buy for Income and Growth

For investors prioritizing both income and growth, GPIQ's strategic advantages-superior upside capture, active volatility management, and cost efficiency-make it a compelling long-term buy. While JEPQ offers a marginally higher dividend yield (10.53% vs. GPIQ's 9.81%) according to performance data, its OTM strategy and flat five-year returns underscore its limitations in volatile or rising markets. In contrast, GPIQ's ability to balance income generation with growth potential positions it as the superior choice for those seeking to participate in the Nasdaq-100's trajectory while mitigating downside risk.

As the Nasdaq-100 continues to evolve as a barometer for innovation-driven equities, GPIQ's strategic differentiation ensures it remains a standout option for income-focused investors.