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I am of the view that the recent selling pressure will begin to subside in September; the market is very efficient about putting risk on and taking it off, suggests Bryan Perry, editor of Cash Machine.

Based on the second-quarter sales, earnings, and guidance from many of the leading technology companies, I want to use this broad pullback to add some high-yield exposure to the tech sector at these lower levels. 

I like how JP Morgan Nasdaq Equity Premium Income ETF (JEPQ) is structured. More importantly, I like the stocks that it owns. The exchange-traded fund holds a basket of big-cap stocks comprising its benchmark, the Nasdaq 100 Index, while pursuing lower volatility.

The ETF also may invest up to 20% of its portfolio in equity-linked notes (ELNs) issued by counterparties, including banks, broker-dealers, or their affiliates, to provide additional income.

An equity-linked note is a debt instrument, usually a bond, that differs from a standard fixed-income security in that the final payout is based on the return of the underlying equity, which can be a single stock, basket of stocks or an equity index. 

The top 10 holdings make up about 53% of total assets, led by Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), and Tesla (TSLA). The recent yield is 9.67%, which is in line with my objective to position new assets in our model portfolio that pay out yields that exceed the rate of current inflation.

The shares of JEPQ pay out a monthly dividend, also a key feature that we can all appreciate. We note that the fund has been trading for only four months.

The shares are down from the recent high of $51, making for an attractive entry point and a prime addition to our Accelerated Income Portfolio. We believe it would be appealing to buy JEPQ under $49.

About the Author

For more than a decade, Bryan Perry has brought his expertise in high-yield investments and option income/trading strategies to his Cash Machine, Quick Income Trader, Instant Income Trader, and Hi-Tech Trader subscribers. He spent more than 20 years working as a broker for major Wall Street firms. Mr. Perry is frequently quoted by Forbes, BusinessWeek, and MarketWatch.

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