Analysis of JEPI and SCHD Underperformance: Equity Income Strategies vs. Total Return Approaches

This analysis originates from a 2025-12-04 Seeking Alpha article [1] arguing that equity income strategies like JEPI and SCHD are failing as core investment approaches in the current market environment. Market data [0] confirms the underperformance: over three months, JEPI delivered ~1.66% price return and ~2.08% dividend return (derived from its ~8.32% annual yield), resulting in a total return of ~3.74%. SCHD, meanwhile, had ~-0.43% price return and ~0.95% dividend return (from its ~3.79% annual yield), totaling ~0.52% return. In contrast, the broader market ETF SPY achieved ~7.20% price return and ~0.35% dividend return (from ~1.4% annual yield), leading to ~7.55% total return. The data shows that even with higher dividend yields, JEPI and SCHD’s total returns significantly lag SPY, aligning with the article’s claim that equity income strategies are underperforming total return-focused approaches.

1. Yield doesn’t offset price underperformance
   : The higher dividends of JEPI and SCHD fail to compensate for their weak price returns, resulting in lower total returns compared to SPY. This indicates that the current market environment is not favorable to the underlying holdings of these equity income strategies, which may prioritize high-yield stocks over those with strong capital appreciation potential.
2. Paradigm shift in risk management
   : The article’s call to “think differently” suggests a need to move beyond traditional equity income strategies as core holdings. Investors may need to reevaluate their approach to balance yield and capital appreciation to manage risk effectively in the current market.

• Risks
  : Investors relying heavily on JEPI and SCHD as core equity income strategies face continued risk of underperformance relative to broader market indices [0][1]. Overemphasis on yield could lead to missed opportunities for capital growth, potentially eroding long-term portfolio value.
• Opportunities
  : Shifting focus to total return approaches (which incorporate both price gains and dividends) may improve portfolio performance in the current market [1]. Re-allocating or complementing equity income holdings with strategies that prioritize capital appreciation could enhance risk-adjusted returns.

The analysis verifies that JEPI and SCHD are underperforming the broader market SPY in terms of total return, even with their higher dividend yields. The Seeking Alpha article [1] argues this underperformance signals a decline in the effectiveness of equity income strategies as core investment approaches. Market data [0] supports this claim, highlighting the need for investors to reassess their risk management and strategy selection in the current market environment.