It's JPMorgan Vs. State Street In ETF Industry's First Brawl: Who Won?

A typically routine adviser email from State Street Investment Management turned unusually combative last week in a rare break from the ETF industry's normally collegial tone. At the center of the dispute was JPMorgan's $40 billion flagship product, the JPMorgan Equity Premium Income ETF (NYSE:JEPI).

The challenge came from State Street's smaller US Equity Premium Income ETF (BATS:SPIN), which circulated an email containing unusually pointed claims and a sharply worded subject line: "Sitting on JEPI losses? Consider SPIN," according to Bloomberg.

JEPI is leading the income ETF crown. Track its prices live, here.

JEPI: The $40 Billion Heavyweight With Relentless Flows

JEPI has been the king of the equity-premium income category since its 2020 debut by combining large-cap stock selection with equity-linked notes that effectively sell S&P 500 call options. The strategy tamps down upside, but the result is steady income, often between 8% and 12% annual yield per Morningstar, with far less volatility than the broader market. Its formula continues to resonate with advisers.

This year alone, JEPI has pulled in $4.39 billion in new money, according to data compiled by VettaFi. Even last week, investors added $3.1 million. Its scale, liquidity, and track record remain unmatched. And, as State Street later conceded, JEPI has delivered 5.28% (1Y), 10.33% (3Y), and 10.93% (5Y) annualized total returns through Oct. 31.

In short: JEPI’s crown is secure.

Also Read: Why Investors Are Ditching High- Or Low-Cost Smart Beta For Mid-Range Active ETFs Like JEPI, JEPQ

SPIN: A Smaller Competitor With Different Options Engine

SPIN, on the other hand, oversees about $56 million using a more traditional approach: a US equity portfolio overlaid with direct covered-call writing. Unlike JEPI’s equity-linked-note-heavy design, SPIN’s income engine is far more transparent and rules-driven, easier for advisers to model, but typically less flexible.

But despite its aggressive marketing, SPIN’s growth has been modest. It raised $51.6 million this year, yet last week saw $5 million in outflows, a reversal which, in retrospect, makes its combative email look even riskier.

The Misfire That Exposed A Problem

Preliminary messaging from State Street relied on cherry-picked “loss” figures that exclude JEPI’s positive days, relying on distribution-based math. That kicked off pushback from JPMorgan, and less than a week later, State Street issued a second email walking back on any claim that JEPI has $14 billion in embedded losses.

The ETF veteran Dave Nadig called the episode "distribution desperation," cited by Bloomberg. He's not wrong. With almost 4,700 US ETFs and rivals multiplying, issuers are fighting harder and louder for adviser attention.

Read Next:

• Milliman Powers Defiance's New BitMine Income ETF, Targeting Big Premiums From Crypto Turbulence

Photo: Shutterstock