Three Years of FEPI: Where the Income Came From
The REX FANG & Innovation Equity Premium Income ETF (FEPI) turns three on October 11, 2026. Since launch, it has held 15 large U.S. technology stocks set by a published, rules-based index, and written calls on each stock rather than on an index. For advisors weighing option income in the equity sleeve, here is the record: total return, income, how premium compared with distributions, and how FEPI fits in a portfolio.
FEPI at Three Years: The Record
Since launching in October 2023, FEPI has grown to $698.4 million in net assets as of 8/31/2026, with a gross expense ratio of 0.65%. Over the past year it returned 18.24% at NAV, and 19.23% annualized since inception. Its distribution rate stood at 25.22%* as of 09/29/2026, paid weekly, with a 30-day SEC yield of -0.32%** as of 08/31/2026.
Most of those distributions have been classified as return of capital (ROC), meaning they are treated as a return of the investor’s own money rather than taxable income in the year paid. Roughly 94.83% of FEPI’s 2025 distributions fell into that category, and current distributions are estimated at 100% ROC. The latest breakdown is always in the 19a-1 notice at rexshares.com/fepi.
Standardized performance as of 8/31/2026
| Total Return | 1 Mo. | 3 Mo. | 6 Mo. | YTD | 1 Yr. | Since Inception |
|---|---|---|---|---|---|---|
| FEPI (NAV) | 8.62% | -3.41% | 14.16% | 8.31% | 18.24% | 19.23% |
| FEPI (Market) | 8.51% | -3.35% | 14.30% | 8.21% | 18.25% | 18.95% |
| S&P 500 | 2.72% | 1.68% | 12.37% | 13.14% | 20.38% | 23.12% |
Source: Bloomberg as of 8/31/2026. Since inception figures measured from FEPI’s inception date, 10/11/2023. The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost, and current performance may be lower or higher than the performance quoted. Short-term performance is not a good indication of the Fund’s future performance, and an investment should not be made based solely on returns. The Fund’s gross expense ratio is 0.65%. Performance current to the most recent month-end can be obtained by calling 844-802-4004 or visiting rexshares.com/fepi.
The gap to the S&P 500 comes from the design. In strong rallies, gains above each strike go to the option buyer, so FEPI is built to earn its keep through income in the equity sleeve rather than by keeping pace with the market on the way up.
How FEPI Works: Rules-Based Holdings, Stock-Level Calls
The holdings follow a published index
FEPI’s portfolio follows the Solactive FANG & Innovation Index (SOLFANGT). The index holds 15 stocks: eight fixed core positions, plus the seven most heavily traded qualifying technology names, ranked by 12-month average daily traded value. The 15 stocks are equally weighted and rebalanced monthly. The seven non-core positions are reconstituted quarterly. The rules are published, so an advisor underwrites a methodology, not a manager’s stock picks.
The calls are written stock by stock
FEPI writes a covered call on each holding. The strategy targets 100% coverage, one-month expirations, and strikes approximately 5% to 15% out of the money, meaning above the stock’s current price. Strike levels are actively managed by the sub-adviser and can change. One-month expirations let the fund reset strikes and capture current volatility about every month.
Put simply: FEPI owns the stocks, sells someone the right to buy each one at a set price above today’s price, and collects a fee for that right, called the option premium. The fund seeks to pay its distributions from that premium.
Why Write Calls on Single Stocks
Single stocks usually carry higher implied volatility (IV) than a broad index. IV is the market’s forecast of how much a price may move, taken from option prices. An index averages out single-stock moves, so its IV is lower. Two features of option pricing make that gap matter.
Premium does not move in a straight line with volatility. REX’s hypothetical estimates for one-month calls show that a 50% drop in IV can cut premium by roughly 75% to 80%, with the largest effect at low IV levels. It works in both directions: a modest rise in IV can mean a meaningful rise in premium.
Higher IV allows strikes further from the current price. At 25% IV, REX estimates that moving a one-month call from 1% to 5% out of the money cuts the premium by more than half, from about 2.5% to about 1.2%. At 50% IV, the same move cuts it by about a quarter, from about 5.4% to about 3.9%. A strike further out leaves more room for each stock to rise before the call limits it.
REX also ran a hypothetical simulation of 36 monthly rolls, comparing the strikes needed to meet a monthly yield target: 1.25% on the S&P 500, 1.50% on the Nasdaq-100, and 2.00% on the FEPI index. The stock-level approach reached higher strikes than both index approaches while targeting the higher yield.
The volatility backdrop matters too. The average level of the Cboe Volatility Index (VIX), a widely followed measure of the market’s expected 30-day volatility for the S&P 500, derived from S&P 500 index option prices, was 15.13 from 2015 through 2019 and 20.71 from 2020 through 8/31/2026 (CBOE). Option writing depends on volatility, and no one can say how long a higher level will last.
IV and strike figures: Source: REX Shares. Hypothetical estimates for illustration only. The relationship between implied volatility and premium varies by security and market conditions. Hypothetical results have inherent limitations, do not reflect actual trading, fees, or expenses, and are not indicative of future results.
Income Quality: Premium Compared With Distributions
A distribution rate does not show where the money comes from. The question to ask is whether option premium covers the payout. From September 2025 through August 2026, FEPI collected an average of 2.95% per month in option premium and paid an average of 1.99% per month in distributions. On average, 0.96% per month stayed in the fund.
Income makes up most of FEPI’s total return. Strikes set further out of the money, and premium retained above the payout, have supported NAV over time. FEPI moved from monthly to weekly distributions in May 2026. The frequency changed; the rate did not.
Risk-Adjusted Yield Against Index-Based Peers
Yield alone favors whichever fund takes the most risk. Dividing 12-month yield by average realized volatility gives a simple measure of income per unit of risk. From 6/30/2024 to 8/31/2026, FEPI had a 24.8% trailing 12-month yield and 22.9% average realized volatility, measured by standard deviation, a ratio of 1.08. That ratio was higher than each of the four Nasdaq-100 option strategies shown, the closest comparison for a technology portfolio. Three of the four S&P 500 strategies had higher ratios, with lower yields and lower volatility.
| Fund | Options on | 12 Mo. Yield | Avg. Vol | Yield / Vol | 30-Day SEC Yield |
|---|---|---|---|---|---|
| FEPI | Individual stocks | 24.8% | 22.9% | 1.08 | -0.32% |
| JEPQ | Nasdaq-100 | 10.8% | 15.8% | 0.69 | 15.06% |
| QQQI | Nasdaq-100 | 14.0% | 19.2% | 0.73 | -0.05% |
| QYLD | Nasdaq-100 | 11.6% | 11.4% | 1.02 | 0.02% |
| GPIQ | Nasdaq-100 | 9.9% | 17.9% | 0.56 | 0.35% |
| JEPI | S&P 500 | 8.0% | 6.1% | 1.30 | 7.88% |
| SPYI | S&P 500 | 11.8% | 10.6% | 1.11 | 0.46% |
| XYLD | S&P 500 | 10.4% | 5.9% | 1.76 | 0.49% |
| GPIX | S&P 500 | 8.0% | 9.3% | 0.87 | 0.83% |
Important comparison information. Comparison funds are shown for illustrative purposes only. They are not directly comparable to FEPI, and the material differences include the following.
Investment objectives and strategies: FEPI holds 15 equally weighted U.S. technology stocks set by the Solactive FANG & Innovation Index and writes covered calls on each individual holding. JEPQ and JEPI hold actively managed stock portfolios and generate option income mainly through equity-linked notes (ELNs) tied to the Nasdaq-100 and S&P 500, respectively. QYLD and XYLD hold their index stocks and write at-the-money calls on the full Nasdaq-100 or S&P 500 position. QQQI and SPYI hold their index stocks and write index call options, which may include call spreads, on the Nasdaq-100 or S&P 500. GPIQ and GPIX hold their index stocks and write index calls on a portion of the portfolio. FEPI is non-diversified and concentrated in one sector; the index-based funds hold far more securities across more sectors.
Costs and expenses: Gross expense ratios: FEPI 0.65%, JEPQ 0.35%, QQQI 0.68%, QYLD 0.60%, GPIQ 0.29%, JEPI 0.35%, SPYI 0.68%, XYLD 0.60%, GPIX 0.29%. Brokerage commissions and bid/ask spreads also apply.
Liquidity: All of the funds trade on an exchange, but their net assets, trading volume, and bid/ask spreads differ. Single-stock options may be less liquid than options on broad indexes, particularly in times of market stress.
Fluctuation of principal and return: Each fund’s NAV and market price will fluctuate, and shares may be worth more or less than their original cost when sold. Because FEPI is concentrated in 15 technology stocks, its returns and volatility may be higher than those of funds tied to broad indexes. Yields and volatility shown cover only the period stated and will differ over other periods. Standardized performance and more information for each fund are available on its fund page, linked from each ticker in the table above.
Tax features: Distributions from each fund may include ordinary income, capital gains, and return of capital in differing proportions. Funds that write options on broad-based indexes (QQQI, SPYI, QYLD, XYLD, GPIQ, and GPIX) may be eligible for Section 1256 treatment (60% long-term and 40% short-term capital gain or loss), which generally does not apply to FEPI’s single-stock options. ELN income in JEPI and JEPQ is generally taxed as ordinary income.
Source: Bloomberg, 6/30/24 to 8/31/26. Click each ticker in the table above for that fund’s standardized performance and more information. Read each fund’s prospectus for complete information. Past performance does not guarantee future results.
Portfolio Fit: An Income Sleeve in the Equity Allocation
FEPI has one role: an income sleeve inside the equity allocation. Within that role, it can serve four purposes.
Four ways to use FEPI
- Capital-efficient income. Funded from an existing technology or Nasdaq-100 position, a modest FEPI allocation seeks to add income without increasing total equity exposure.
- Income from growth sectors. Large technology companies pay little in dividends. FEPI seeks to turn their volatility into weekly distributions, adding an income source beyond traditional dividend payers.
- A cushion on growth exposure. Option premium may help offset part of a drawdown in U.S. technology stocks compared with holding the same stocks without calls.
- Income in sideways or volatile markets. FEPI is designed to generate premium when price returns are muted, and higher volatility generally means higher premium.
Adding FEPI to an existing covered call allocation
Many advisors already hold index-based covered call funds, so the practical question is what a FEPI sleeve adds next to them. Bloomberg data on hypothetical blends of JEPI, JEPQ, and FEPI, from FEPI’s inception through 8/31/2026, shows the trade-off:
| JEPI / JEPQ / FEPI | 50/50/0 | 45/45/10 | 40/40/20 | 35/35/30 |
|---|---|---|---|---|
| Cumulative total return | 52.10% | 53.50% | 54.90% | 56.30% |
| Annualized return | 15.60% | 16.00% | 16.40% | 16.70% |
| Maximum drawdown | -16.70% | -17.30% | -17.90% | -18.50% |
| Annualized volatility (monthly) | 8.40% | 8.80% | 9.40% | 10.10% |
| Distribution rate | 10.10% | 11.60% | 13.20% | 14.80% |
In the 40/40/20 blend, a 20% FEPI sleeve raised distribution rate by about 3 percentage points, from 10.10% to 13.20%, while annualized volatility rose about 1 point, from 8.40% to 9.40%. On a hypothetical $1 million invested at 40/40/20 since FEPI’s inception, the FEPI sleeve generated roughly $114,000 more in distributions than the 50/50 base.
Source: Bloomberg, 10/11/2023 to 8/31/2026. Hypothetical blended portfolios for illustration only; they do not represent actual client accounts and do not reflect rebalancing costs, taxes, or advisory fees. JEPI and JEPQ differ from FEPI in investment objectives, strategies, costs, liquidity, fluctuation of principal and return, and tax features; see Important comparison information above. Past performance does not guarantee future results.
A line to use with clients: “This sleeve seeks extra income from options written on 15 large tech stocks chosen by a published index, not by a manager.”
Three Years, Live: Join the Anniversary Webinar
REX Portfolio Solutions’ Head of Research and Head of Product Strategy will review FEPI’s first three years and the single-stock approach, then take live questions, on [Month DD], 2026 at [Time] ET. Register at [registration link]. To discuss where FEPI fits in your clients’ income allocations, contact the REX team at sales@rexfin.com or 1-844-802-4004. Fund details, holdings, and the prospectus are at rexshares.com/fepi.
REX Portfolio Solutions. Built on rules, not stock picks.
Definitions and Important Disclosures
*Distribution Rate (25.22% as of 09/29/2026): The annual rate an investor would receive if the most recently declared distribution, which includes option income, remained the same going forward. It is calculated by multiplying the Fund’s Distribution per Share by 52 and dividing the result by the Fund’s most recent NAV. The Distribution Rate represents a single distribution and does not represent total return. Distributions may include ordinary dividends, capital gains, and return of capital, and their composition may change during the tax year. See the Fund’s 19a-1 notice at rexshares.com/fepi. Final tax character is determined on Form 1099-DIV. Past distributions are not indicative of future distributions.
**30-Day SEC Yield (-0.32% as of 08/31/2026): Net investment income, which excludes option income, earned over the 30-day period, expressed as an annual percentage rate based on the Fund’s share price at the end of the period. The unsubsidized SEC Yield does not reflect any fee waivers or reimbursements.
12 Mo. Yield: Annualized yield over the trailing 12-month period. Avg. Vol: Average realized volatility over the period shown, measured as the annualized standard deviation of monthly returns. Standard deviation measures how widely a fund’s returns vary around their average; a higher number means larger price swings. Yield/Vol: 12 Mo. Yield divided by Avg. Vol. Out of the Money (OTM): A call option whose strike price is above the current price of the underlying security. VIX: Cboe Volatility Index. Indexes are unmanaged and one cannot invest directly in an index.
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost, and current performance may be lower or higher than the performance quoted. Short-term performance is not a good indication of the Fund’s future performance, and an investment should not be made based solely on returns. The Fund’s gross expense ratio is 0.65%.
Investing in the Fund involves a high degree of risk. You could lose all or a portion of your investment. The Fund is non-diversified and concentrated in the technology sector. Call Writing Strategy Risk: the Fund’s call writing strategy limits its participation in gains of the underlying securities. Derivatives Risk: options may pose risks in addition to, and greater than, directly investing in securities, including market, correlation, liquidity, valuation, and counterparty risk. Liquidity Risk: some holdings, including options, may be difficult to sell, particularly in times of market turmoil. Distribution Risk: there is no assurance the Fund will make a distribution in any given week; amounts may vary and may consist of return of capital, which would decrease the Fund’s NAV and trading price over time. Non-Diversification Risk: the Fund may invest a greater percentage of its assets in a smaller number of issuers. Options Contracts Risk: The use of options contracts involves investment strategies and risks different from those associated with ordinary portfolio securities transactions. The prices of options are volatile and are influenced by, among other things, actual and anticipated changes in the value of the underlying instrument, including the anticipated volatility, which are affected by fiscal and monetary policies and by national and international political, changes in the actual or implied volatility of the underlying reference security, the time remaining until the expiration of the option contract and economic events.
This information is not tax advice. Investors should consult a qualified tax professional about their own circumstances.
This material must be preceded or accompanied by a prospectus. For the FEPI prospectus, please click here.
THE FUND, TRUST, ADVISER, AND SUB-ADVISER ARE NOT AFFILIATED WITH THE FUND’S UNDERLYING SECURITIES.
Funds distributed by Foreside Fund Services, LLC, not affiliated with REX Shares, LLC.
