REX FANG & Innovation Equity Premium Income ETF

FEPI

Market cap $529M

REX FANG & Innovation Equity Premium Income ETF offers a yield of ~25%. Optically, this looks like a value trap or covered call ETF with a clear NAV erosion dynamic. Yet, as I detail it in the article, FEPI is different.

Imagine stocks and funds paying you dividends monthly! Your angst awaiting dividend payout is reduced 300%, or more, compared to quarterly, semi-annual, or (ugh) annual doles! September U.S. exchange-traded-monthly-paid (MoPay) dividends, upsides, and net-gains include: 1. Stocks-by-yield (77); 2. Stocks-by price-upside (30); 3. Closed-End-Investments, Exchange-Traded-Funds & Notes (CEICs/ETFs/ETNs) by-yield >10% (80); 4. ‘Safer' Ideal-Dividend-Equities by Cash Flow Margins (31). Items: 1. Top MoPay stock gains; 2. Overall best MoPay gainers; 3. Funds vs. Equities; 4. Fund risks/rewards. 5. Safer Equity Rankings All per prices as of 8/29/25.

FEPI offers a compelling 25% yield with monthly distributions, making it attractive for income-focused investors seeking lower volatility and capital preservation. The ETF's strategy of holding common shares and writing OTM options allows for some growth participation while limiting capital erosion compared to synthetic peers. FEPI's distributions are tax-efficient, primarily classified as return of capital, helping investors defer taxes and potentially recover their initial investment within four years.

Usually, everything that offers a double digit dividend yield carries an elevated risk of being a value trap. If we speak about 25%+ yield zone, then I would say that '99%' of cases are just that - i.e., value traps. However, there are some very rare exceptions out there.

REX FANG & Innovation Equity Premium Income ETF offers a high 25% yield by writing covered calls on 15 mega-cap tech stocks, appealing to income-focused investors. The fund's strategy sacrifices significant upside potential compared to simply holding the underlying stocks, which may frustrate growth-oriented investors. I appreciate FEPI's steady distributions and relatively mild NAV erosion, though the non-core stock selection based on trading volume is a drawback.

June U.S. exchange-traded monthly paid (MoPay) dividends, upsides, and net-gains include: 1. Stocks-by-yield (80); 2. Stocks-by-price-upside (30); 3. Closed-End-Investments, Exchange-Traded-Funds & Notes (CEICs/ETFs/ETNs) by yield >10% (80); 4. ‘Safer' Ideal-Dividend-Equities by Cash-Flow-Margins. Analyst estimates suggest top MoPay stocks could net 16.48% to 33.67% gains by June 2026, with an average net gain of 23.57% and higher-than-market risk. The dogcatcher rule highlights 31 'safer' MoPay stocks where dividends from $1K invested exceed share price, positive returns, and strong free cash flow coverage.

Weekly income ETFs are booming, with new funds leveraging 0DTE options strategies to generate high-yield, frequent distributions for passive income seekers. Roundhill, YieldMax, Rex Shares, and GraniteShares have all launched innovative ETFs offering weekly payouts, each with unique strategies and underlying assets. While yields are attractive—some exceeding 20% annually—these funds are new, so investors should monitor performance and understand the risks involved.

FEPI offers high yield (25-35%) via call writing on a concentrated tech portfolio, but this aggressive payout erodes NAV over time. Stock selection methodology is interesting, blending FANG/Mag 7 with high-volume tech names, but lacks clarity on future rebalancing. Performance and drawdown management are weak; FEPI underperforms in both bullish and corrective markets compared to peers.

FEPI's 28% yield is eye-catching, but its aggressive covered call strategy leads to significant price erosion and downside risk over time. The ETF's heavy exposure to slow-growing, overvalued tech giants like Tesla and Apple increases vulnerability to market corrections and valuation resets. April's market sell-off highlighted FEPI's limited upside and pronounced downside, as it failed to recover like broader tech indices or peer ETFs.

I use high-yield option ETFs to generate frequent, substantial income, which I manually reinvest into undervalued growth stocks for compounding returns. My Dividend Wheel strategy allows for flexible allocation of distributions, helping build growth positions without additional capital, and can be scaled to any income level. Strategic use of margin can amplify income, but I stress a conservative approach and caution against over-leverage or using margin without a solid financial foundation.