BlackRock Follows Goldman with Launch of JEPI Copycat
The funds both carry fees of 0.35%.
If imitation is flattery, BlackRock Inc.’s latest equity income launch is a tribute to competing asset management giant JPMorgan Chase & Co.’s wildly successful options-writing exchange-traded fund.
The BlackRock Advantage Large Cap Income ETF (BALI), launched Sept. 28, tracks dividend paying companies and offers investors exposure to income from call options on the S&P 500, according to a press release.
The fund also takes a page from the options writing playbook of the JPMorgan Equity premium Income ETF (JEPI), which was the reigning bond fund last year. JPMorgan's blockbuster product has now attracted nearly $30 billion in assets since May 2020, and brought in over $16 billion in the past year alone.
“JEPI is the envy of the industry because of how successful it’s been,” said Todd Sohn, ETF analyst at Strategas Securities.
BlackRock isn’t the only firm looking to JEPI’s success as inspiration. Goldman Sachs announced plans to launch two option writing fixed-income strategies in June—the Goldman Sachs U.S. Equity Premium Income ETF and the Goldman Sachs U.S. Tech Index Equity Premium Income ETF—which have yet to launch.
BlackRock’s BALI also takes a cue from JEPI on fees, both charging 0.35%.
“Most investors who want this type of strategy are going to gravitate towards the more established fund—for now,” said etf.com analyst Sumit Roy. “That said, longer-term, BALI could differentiate itself.”
The fund is managed by the Raffaele Savi, the Global Head of BlackRock Systematic, according to the release.
BALI Eyes JEPI’s Reign Over Income
To be sure, there are differences in the two funds. BlackRock’s BALI is investing in U.S. dividend paying stocks, while JEPI’s biggest holding, Amazon, does not pay investors dividends.
Differences in strategy, as well as portfolio management decisions, could also cause a divergence in performance. “If the BlackRock ETF can outperform, investors will likely take notice,” Roy said.
BALI is also structured to be able to hold futures contracts on a large cap equity index to offset the potential cap on gains from the ETF’s covered call positions, according to analyst Aniket Ullal of CFRA Research.
JEPI is also focused on low volatility stocks compared to BlackRock’s latest launch, he said.
“Even though this category has grown a lot, there is probably still room for both players,” said Ullal. “I don't think it's a case of one is just going to take market share from the other—the whole category could grow.”
Contact Lucy Brewster at [email protected].
