Barry Martin, Portfolio Manager at Shelton Capital Management, breaks down Shelton’s Equity Premium Income ETF (SEPI) in our latest video on Schwab Network’s Watch List.
- How SEPI uses a covered call strategy on select large-cap U.S. stocks
- How the approach seeks cash flow from dividends and option premiums while keeping equity exposure
- Why the team looks to monetize market volatility while keeping risk in check
- How the team manages the strategy over time and the types of investors who may consider it
Watch the full conversation
IMPORTANT INFORMATION
The Shelton Equity Premium Income ETF (the “Fund”) objective is to seek to achieve a high level of income and capital appreciation (when consistent with high income) by investing primarily in income-producing U.S. equity securities.
The Shelton Equity Premium Income ETF is distributed by Paralel Distributors LLC, Member Firm. Shelton Capital Management is not affiliated with Paralel Distributors LLC.
Performance as of 9/30/2025:
SEPI (NAV-25.62): 3Q25: N/A YTD: N/A 1YR: N/A 3YR: N/A *Since Inception: 2.50%
SEPI (Market Price -25.66): 3Q25: N/A YTD: N/A 1YR: N/A 3YR: N/A *Since Inception: 2.79%
The CBOE BuyWrite Index: 3Q25: 3.53% YTD: 2.23% 1YR: 8.15% 3YR: 13.60% *Since Inception: 1.22%
S&P 500 Index: 3Q25: 8.11% YTD: 14.81% 1YR: 17.56% 3YR: 24.88% *Since Inceptio:3.04%
SEPI Total Expense Ratio: 0.54%
*Fund inception date: 9/8/2025. The performance data quoted represents past performance and does not guarantee future results. 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 the original cost. Current performance may be lower or higher than the performance quoted. NAV is the sum of all its assets less any liabilities, divided by the number of shares outstanding.
Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Market returns are based upon the midpoint of the bid/ask spread at 4:00 p.m. Eastern time (when NAV is normally determined for most ETFs), and do not represent the returns you would receive if you traded shares at other times. Ordinary brokerage commissions may apply and will reduce returns. Returns include reinvestment of dividends and capital gains.
Indexes are unmanaged and it’s not possible to invest directly in an index. The S&P 500 Total Return Index is a market-cap-weighted index of the 500 largest U.S. publicly traded companies. The Cboe BuyWrite Index (BXM) tracks the performance of a hypothetical buy-write strategy on the S&P 500 Index. SEPI differs substantially from the S&P 500 and BXM indexes, which are used for comparison purposes as widely recognized measure of U.S. stock market performance.
The VIX (often called the fear index) measures how much volatility investors expect in the stock market over the next 30 days, with higher values signaling more uncertainty and larger expected price swings, while lower values suggest calmer markets.
Option strike price is the preset price at which an option allows an investor to buy (call) or sell (put) a stock; an option is considered out of the money when it currently has no intrinsic value—meaning a call option’s strike price is above the stock price or a put option’s strike price is below the stock price; a naked option refers to selling an option without owning the underlying stock or having protective coverage, which can expose the seller to very large or even unlimited losses.
Leverage involves using borrowed money or financial instruments to increase market exposure, amplifying both gains and losses; and leveraged ETFs use leverage to attempt to deliver a multiple (such as 2× or 3×) of an index’s daily return, making them generally more suitable for short-term trading rather than long-term investing due to daily resets and compounding effects.
SEPI Fund Disclosures
An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. To obtain a prospectus containing this and other information, please call (800) 955-9988 or visit www.sheltoncap.com/sepi. Read the prospectus carefully before investing.
Exchange Traded Funds (“ETFs”) are subject to the possible loss of principal. The value of the ETFs will fluctuate with the value of the underlying securities. ETF Shares may trade at prices above or below NAV. Liquidity isn’t guaranteed, and trading may be halted due to market-wide or security-specific events, delisting, or exchange actions.
The Fund is new with a limited operating history. Portfolio holdings are subject to change and may not reflect current allocations.
The value of the Fund’s equity holdings may decline, sometimes unpredictably, due to broader economic, political, or market conditions not specific to individual companies. Because the Fund is primarily invested in U.S. stocks, its value will fluctuate with overall market movements and may decline during market downturns, potentially resulting in losses. The Fund’s use of call and put options can limit upside potential and increase costs, particularly if market movements render the options ineffective or result in expired contracts without value.
Investments in derivatives may be riskier than other types of investments. They may be more sensitive to changes in economic or market conditions than other types of investments. Many derivatives create leverage, which could lead to greater volatility and losses that significantly exceed the original investment. Positions in equity options can reduce equity market risk, but can limit the opportunity to profit from an increase in the market value of stocks in exchange for upfront cash as the time of selling the call option. Unusual market conditions or the lack of a ready market for any particular option at a specific time may reduce the effectiveness of option strategies and could result in losses.
Cash flow is the money generated or available to distribute to shareholders. Distributions may include option premium, ordinary dividends, interest income, capital gains, or return of capital. Distributions may coincide with a decline in NAV. Distribution levels may vary and no minimum distribution amount can be guaranteed.
A 60/40 portfolio allocation is an investment strategy that puts 60% in stocks and 40% in bonds. In the video, alternative portfolios were discussed, below is more details:
A 60/20/20 portfolio of 60% stocks (SPX Index), 20% bonds (Bloomberg US Agg Index), (20% to an Options-Based Strategy) Portfolio. The S&P 500, is a stock market index tracking the stock performance of 500 leading companies listed on stock exchanges in the United States. The Bloomberg US Aggregate Index (or “Agg”) is a flagship benchmark for the US investment-grade, fixed-rate, taxable bond market, representing over $50 trillion in securities. The CBOE S&P 500 BuyWrite Index or BMM is a benchmark index designed to show the hypothetical performance of a portfolio that engages in a buy-write strategy using S&P 500 index call options. One cannot invest directly into an index. Click here for the whitepaper and more details on Option Strategies.
INVESTMENTS ARE NOT FDIC INSURED OR BANK GUARANTEED AND MAY LOSE VALUE.
SEPI58
