FEPI’s 25% yield, funded by selling calls on AI mega-caps, has seen payouts decline from 2024 levels amid lower volatility.
The REX FANG & Innovation Equity Premium Income ETF (NASDAQ:FEPI) has delivered an 18% return over the past year, lagging the QQQ’s 29% gain as its call-writing strategy surrendered roughly half the tech rally. Weekly payouts have fallen to about $0.21 per share from earlier 2024 levels, despite a $42 share price annualizing to a ~25% yield.
FEPI generates income by selling short-dated calls on a concentrated basket of AI and mega-cap tech stocks, with $19.7 million in short call exposure against a $652 million net asset base. The strategy relies on premiums from these options, but declining volatility has eroded distributions, raising questions about sustainability.
The fund’s performance highlights the trade-off between yield and upside participation in volatility-sensitive income strategies, particularly in a high-growth sector like AI.