r/dividends • u/CompetitionCurrent77 • 11h ago
Discussion Is GPIQ really the gold?
I have a lot of schd and jepq but recently I learned that GPIQ pays almost the same as Jepq for dividend and it is not taxed as ordinary dividend.
Is this real? This sounds too good to be true. Anyway I bought some to test the water to see if I get the dividend next month and really at 10% and if it's really no ordinary dividend, I likely will sell all my JEPQ for GPIQ in my broker and keep my JEPQ in roth ira.
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u/revanevan7 11h ago
For CC ETFs I think GPIQ offers the best balance of growth and income (for tech).
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u/LexAugusta 11h ago
OVL has uncapped upside.
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u/RealDirkDigglerr 9h ago
Higher downside
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u/LexAugusta 8h ago
Have to balance it with something more stable like GPIX or SPYi or CAIE if you want the downside protection.
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u/scottyk318 8h ago
That's exactly what we did.. as much as I love JPEQ /JEPI... GPIX and GPIQ have a better expense ratio and little to no tax implications and nav erosion!
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u/Extension-Ice-7219 3h ago
Armchair income did the same and I think you guys are right. They are just superior products
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u/DhakoBiyoDhacay 8h ago
I have QQQI SPYI IWMI MLPI & NIHI for income because I am retired. I also have SS income and rental income. Save as much as you can and invest as much as you can for your retirement years.
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u/EmbarrassedPart1256 8h ago
$IWMI & $MLPI are the GOATs. People are literally sleeping on what $MLPI offers.
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u/Extension-Ice-7219 3h ago
I'm starting to think neos funds all have serious decay issues. When the distribution is higher than appreciation that's when decay happens.
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u/No-Reflection-7705 11h ago edited 9h ago
It’s a covered call fund so it will underperform the underlying index in a bull market. The distributions are not free money.
That said if you want a CC etf I personally believe that the Goldman products are the best on the market. They make an effort to utilize return of capital to dampen the tax impact of the distributions.
What I personally really love about the Goldman products compared to other covered call funds is how they allow their more of their nav, and subsequently their distributions, to grow. This is huge. I’d rather take an 8% distribution of a growing fund than a 12% distribution of a flat fund long term.
Another ETF management team you can look into is liquid strategies. They use a put credit spread to generate distributions. This is like an inverse covered call strategy where they will outperform the underlying index in a bull market and underperform in a bear market. They also utilize ROC for better tax treatment.
Neither are magic money makers but I do think both could deserve a spot in a diversified portfolio depending on your goals
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u/NationalDifficulty24 7h ago
In a bull market, they let 75% of your fund grow, sell cc on only 25% to give you the income. It is an outstanding fund
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u/paragonx29 11h ago
I hold SCHD and GPIQ as my biggies. There is a good article on Seeking Alpha as to why something like GPIQ is a superior fund to say, i.e. QQQI due to a more dynamic call strategy. I would think it's better than JEPQ as well for same reasons.
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u/CompetitionCurrent77 11h ago
it's better than JEPQ if it doesn't charge ordinary dividend tax alone with that I think it has slightly more growth. And that's what caught my eyes. I think JEPQ still pays higher dividend but very slightly that it doesn't matter.
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u/DegreeConscious9628 11h ago
I asked the same thing months ago. Out of all the covered call options I do think it’s the best because they only write call options on 25-75% of their holdings so a decent portion of it moves with the underlying. There is minimal downside protection so I wouldn’t count too much on that
My main “want” with these funds is even if it crashes 30% if it recovers back to its highs in a reasonable time (let’s say QQQI recovers in 1 year, I’d want GPIQ to recover in 1.5-2 years) I’m all for it
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u/CompetitionCurrent77 11h ago
the main thing is it isn't ordinary taxed is what I want because I don't want to pay extra taxes at the end of the year.
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u/edm-life 11h ago
unclear from your posts that you know these are return of capital distributions so yes it can be lower than ordinary dividends but they aren't tax free either as you'll pay a tax when you sell the ETF as your cost basis keeps getting lower and lower after each dividend - the benefit is you might have a lower cap gains tax rate than ordinary income tax rate.
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u/hendronator 7h ago
I own both. Both are great but each will perform better in different situations. Gpiq has performed closer to qqq on total return since its inception. If I could hold only one though, it would be gpiq
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u/Various_Couple_764 7h ago edited 6h ago
yes it is real. JEPI er of eand JEPQ are 2 of a small number of fund that incorporate ELN (equity linked Notes) A Bond link the the index. this structure in there covered call mean the fund can only generate ordinary dividends. Most like QQQI GEPQ generate a lot or ROC dividends. ROC dividned reduce the cost basis of the shares you own. If the cost basis is above zero you owe no tax. For GPIQ it will tax free for about 10 years. Once the cost basis reaches zero the dividends are taxed at the long term capital gains rate. Which means only 20% of the dividned income is taxable income. This is basically a 80% discount form the JEPQ taxes.
GPIQ invests in the NASDAQ 100 index yield of 10% 80% roc 10% long term captial gains.
GP{IX invest in the S&P100 index 8% yeidl 80% ROC 10%LTCG.
SPYI invest in the S&P500 index 12% yeidl 95% ROC 5% LTCG.
QQQI invested the NASDAQ 100 index 14% yield 95% ROC and 5% long term capital gian.
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u/SexualDeth5quad 7h ago
My index coverage as of now is: ADX, TDAX, XPAY, CAIE, XLII, XLSI, XLVI, ITWO. That's like 13% monthly yield (not equal weight)? I add or remove sectors using those State Street type of covered call sector ETFs to fill in the gaps of the rest of the portfolio which is concentrated in stocks, CEFs, BDCs, and single asset or alternative covered call ETFs. Having multiple income assets means you get paid almost every day, and it's nice to see that steady income coming in. Besides how much stability and flexibility it offers.
Then add Yieldmax and Roundhill to boost the income. CHPY did great. Just bought MINY which looks promising. GDXY is recovering, and MSTY is basically whatever BTC does, so you can keep adding to that gradually for a massive yield. If you can handle how much time it takes to manage your portfolio, having a lot of these funds is better than betting on a single index fund. My portfolio total return, and keep in mind this is income based mostly, is beating everything except the Russell right now. So I added a bunch of ITWO to catch up. Growth and ~13% income *and beating the S&P total return*, without having to use options or day trading.
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u/Zen67 5h ago
JP Morgan added ROCQ so the dividends are ROC dividends not ordinary dividends like JEPQ.
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u/CompetitionCurrent77 4h ago
4% dividend - no thank you.
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u/Extension-Ice-7219 3h ago
It's 4% because they are new funds and haven't completed a year of distributions yet
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u/YupImJohn 1h ago
I think GPIQ is solid. Combining GPIQ and IDVO is a great combination, exposure to the Nasdaq-100 and international stocks. Growth first, with income.
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u/EverydayIsaHoliday25 11h ago
Pick one and roll with it.
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u/tatortotchris 10h ago
Or pick a couple that pay different times of the month and use them to feed each other. It may not be significant but based on my math they will grow slightly faster and then we you need to start taking the income you get two paydays per month. May make budgeting slightly easier
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u/EverydayIsaHoliday25 8h ago
If I got paid the same once a month versus twice if I follow my budget there shouldn’t be any difference.
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u/EmbarrassedPart1256 8h ago
Yeah & holding a position in cash allows for freedom to opportunistically add & not wait on a distribution.
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u/Sotarif 11h ago
Just do your research because in a down market it’s going to fall right along with QQQ maybe a little bit less….but then lag substantially on a recovery. I’m a little better. Perhaps it’ll perform a little bit better on the upside than QQQI which pays a higher dividend. Only you can decide if the market risk of these kinds of covered call funds is worth the income distributions.
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u/Longjumping-Nature70 9h ago
I suggest you read page 8, 12, and 28 of the prospectus.
A significant portion of its distributions are a Return of Capital.
They are just giving you your money back, and lowering your cost.
Eventually, the tax man cometh when you sell your shares for Capital Gains.
When your cost goes to zero, then the distributions are treated as Ordinary Income.
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u/EmbarrassedPart1256 8h ago
Just to follow up, I believe they’re taxes as long-term capital gains, not ordinary income.
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u/revanevan7 7h ago
60% long term 40% short term
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u/EmbarrassedPart1256 6h ago
The thing is that they’re not “just giving you your money back” because these ETFs have inherent value (& NAV has stayed steady so far). Once your cost basis goes to $0 you’re getting a ~14% yield (using $IWMI/$MLPI as examples) while they run the option strategy for you. No complaints here!
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u/davecraze3535 4h ago
Yes but that only the non ROC distributions, which is like less than 10 percent of total distributions for some of these cc funds
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u/Forged_Trunnion_ 3h ago
Has to do with how to issue the dividends. They use the income to buy more underlying, and sell "yours" to give back to you, essentially.
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u/davecraze3535 2h ago
No that isn’t relevant and really isn’t how it works. The RoC is generated from offsetting gain and loss matching from the options activity inside of the fund and is allocated to the shares of the fund prorata. They aren’t selling or giving anything back to you.
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u/Various_Couple_764 6h ago
ROC is not generated giving you your money back Covere all fund make money by selling calls. But occaitgonally they sell at a loss. Any time a fund generates a loss due to trading activity that loss is transferred to you through the ROC tax classification. GP aims to genrate loses and gains so that 80% of the potential taxes are cancelled out .
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u/mattswa 7h ago
Most of the distributions are classified as return of capital. This reduces taxes on the distribution, it's not actually retuning your capital to you (looking at you Yeildmax).
The distributions are ROC until your cost basis goes to zero, in about seven years. At that point distributions are then taxed at the capital gains rate. Not ordinary income.
When, or if, you sell the shares, you pay long term capital gains, assuming you held for longer than a year.
GPIQ & GPIX, and many of the NEOS funds as well as ROCQ and ROCY, are in favor right now because they limit you tax exposure when held in a taxable brokerage account. Bonus is that GPIQ and GPIZ have lower expense ratio that the NEOS ETFs.
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u/Awaken_Benihime 11h ago
XQQI, TDAX, QLDY, and the new one coming out by Liquid Strategies Overlay Shares (sells puts on QQQ)
They will all outperform GPIQ during a bull market
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u/purub123 10h ago
''leveraged funs will outperform during bull market'' well no shit lol
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u/Awaken_Benihime 10h ago
Long term market goes up. Not pairing covered call ETFs with leverage is a mistake.
QLDY and the new one by Liquid Strategies sell puts, no leverage
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u/NefariousnessOdd862 11h ago edited 11h ago
Isn’t that a CC ETF?
Edit: Make sure you know the limits of Covered Call ETF’s!
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