Shelton Capital To Launch SEPI ETF, Betting On Options-Income Boom

Shelton Capital Management is entering the red-hot options-income ETF space with plans to debut the Shelton Equity Premium Income ETF (SEPI) tentatively on Sept. 8. The $6 billion asset manager submitted a registration statement with the U.S. Securities and Exchange Commission this week, establishing the new vehicle as a unique play in the saturated income-ETF market.

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In contrast to much of its peer group, which relies on index-based alternatives or synthetic notes, SEPI will sell covered calls on individual big-cap stocks, a strategy Shelton describes as one that aims to balance income generation and upside potential. CEO Steve Rogers notes that the strategy benefits from the same research platform that helped give Shelton’s EQTIX mutual fund a 5-star Morningstar rating.

The actively managed ETF seeks to blend option premiums and dividend distributions to return improved cash flow, appealing to income investors looking for flexibility.

The fund announcement coincides with derivative-income ETFs that are exploding in popularity, as Morningstar data indicate category assets ballooning from $1 billion in 2018 to over $130 billion today. Shelton believes that investor appetite for higher-yielding, actively managed strategies packaged inside an ETF wrapper will remain strong.

According to Morningstar, JPMorgan Equity Premium Income ETF (NYSE:JEPI) ($40.2 billion) and JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ) ($28.3 billion) claimed half of the derivative income ETF market in July, making them the biggest competitors of SEPI.

Core Characteristics Of SEPI

Income strategy: Covered call and cash-secured put writing on large-cap equities.

Active strategy: Risk-conscious equity selection, along with tactical option implementation.

ETF advantages: Intraday trading, minimal minimums, and current pricing.

The SEPI launch represents Shelton’s entry into the ETF options-income universe and may provide income investors with a new choice to market-favorite covered-call funds.

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