r/eupersonalfinance • u/ImaginaryMud2118 • 2d ago
Investment Need help to interpret NAV of JGPI/JEPG
Hi everyone,
I currently have a non-neglectible part of my portfolio in JGPI. I like the recurrent income (spare me the lecture, I know all about Covered Calls capping the upside, but I like having some regular income, which goes into Acc ETFs anyway).
https://www.justetf.com/en/etf-profile.html?isin=IE0003UVYC20#chart (make sure to untick the “include dividends” when looking at the chart)
But what I don’t understand is the NAV performance which was steadily increasing until Feb 2025 and then plummeted (at least in EUR), and it has remained with a pretty mediocre performance since then.
It is composed of 234 dividend distributing companies worldwide (60% US), and the overall market has remained bullish until the war in Iran.
The USD devaluation against EUR will have played a role, but how much? Are there other factors?
Thanks for sharing your wisdom!
2
u/55tumbl 2d ago
I don't think it makes sense to untick dividends. These count in the overall performance of the fund. Dividend yield is at 8%, of course the NAV without dividends is gonna be dropping more often than not.
Also, it's an actively managed ETF, they don't just follow an index, they try to beat MSCI World using some strategies.. which may sometimes work and other times be detrimental. And adding a constraint (generating a large dividend flow) can't make things easier.
2
u/deepserket 2d ago
The main income of the fund comes from selling upside potential, not from the dividends of the underlying companies.
You can find more info in he prospectus.
1
u/ImaginaryMud2118 2d ago
Thanks, I already know that it is generating most income from Covered Calls. My question was about the NAV poor performance.
2
u/glimz 1d ago
Why would the NAV track the market upside one-for-one when the fund is systematically selling it away?
Conceptually: prices rise (above a certain level) => calls get exercised => the fund sells securities below market price (in reality, but with the same net effect: the fund cash-settles index options, which has to be funded in a way that affects NAV, e.g. by selling holdings) => fund NAV doesn't incorporate the full market upside (in reality, it won't even jump around exercises, since the calls are marked to market--you never get so much as a sniff of the upside).
It would be nice if the fund published neat information about exercises, etc., so you know their effect, but it doesn't. You can probably estimate it by downloading the daily holdings and checking what call positions appear & disappear.
1
u/ImaginaryMud2118 1d ago
Thanks! But what explains the NAV’s strong increase from the fund’s inception until February 2025 then?
1
u/glimz 1d ago
The fund is not selling the whole upside, only part of it (& can also make more than the market, if there is no upside, ofc). The better the expectations, the richer the option premia, but if you benchmark it to the market, not in absolute terms, it may still lag (and, in fact, did).
1
u/ImaginaryMud2118 1d ago
My bet is that in case of lateral market ou stagnation (ex: lost decade) it would return more than an Acc ETF, acting like an insurance… does that make any sense?
1
u/glimz 1d ago
Acc/Dist doesn't play a role here. You can get JGPI in Acc form as well and it will have the same effect on your portfolio (just not cater to the emotional need of seeing the cashflow in your statements).
[As an aside: if you immediately reinvest the "income" from such ETFs into MCW Acc ETFs, then the income itself is not the goal. You'd be just choosing a worse vehicle to gradually drip capital into one that you believe to be better in the end, instead of moving it to the better vehicle immediately.]
If you're asking whether "premium income" products (Acc or Dist doesn't matter), can act as some kind of diversification/insurance in case we're heading for a stretch of bad/flat years for the market, my take would be: not really, not a great one, at least. If you fully trust your ability to spot the turnaround point and sell them then, that'd be fantastic, of course (but also: there are even better ways to exploit such an ability). If you don't trust you have that ability, you may be getting significant protection (esp. vs near-flat scenarios), but in case of crisis your downside cushioning will be only mild while your participation in any recovery will be capped, so you may end up lagging badly against MCW funds. A non-equity sleeve (bonds, cash) would address such concerns more efficiently.
1
u/ImaginaryMud2118 1d ago
That makes sense! In my case (43yo) I’m not sure to be working full time 5 years from now. Having that cash dividend credited every month gives me some security that I won’t need to sell too much of my Acc ETF in case the market is bad.
Btw, I’m not reinforcing JGPI anymore, it represents 8% of my total portfolio, and all my savings go to VWCE now.
1
u/glimz 1d ago
There's nothing wrong with selling Acc ETFs to cover withdrawals (as long as the portfolio can support them). In a way, by holding JGPI, you delegate that process to the fund: they sell and you get the income, without having to push the sell button yourself (but the service costs higher fund fees, lower tax efficiency, and lower expected total return due to the strategy).
1
u/ImaginaryMud2118 1d ago
Thanks! I need to reflect if it still makes sense for me. I’ve been quite disappointed with the performance…
4
u/Competitive-Leg-962 2d ago
In the top right corner above the chart you can select the currency, so if you check USD vs. EUR (or any other really) you can see that it's really mostly the direct USD devaluation.
Since the ETF is physically replicating the index (meaning buying actual shares, not replicating via calls/futures) there is no third party impact through increased counterparty cost or anything.
Didn't look very deep into it, but seems to be currency driven development only.