At a glance
PEPS charges 0.1% a year. It has $28.9M in assets; it paid 0.95% of its price in distributions over the past 12 months, quarterly. Over the past year it returned +14.5% with distributions reinvested (S&P 500: +11.5%). Its ten largest positions make up 36.2% of the fund, out of 174 in all.
The short version
Parametric Equity Plus ETF (PEPS) is an actively managed Morgan Stanley fund holding a subset of large U.S. stocks chosen to track the Solactive GBS United States 500 Index while selling S&P 500 call options. Unlike most call-selling funds, it aims to keep market-like exposure and add some extra return, not pay high income. It costs 0.10% a year after a fee waiver but is small and launched in November 2024.
Price history
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PEPS +14.5% over the year to Oct 27, 2026, total return with distributions reinvested.
How it has behaved
| YTD | 1 yr | 3 yr | 5 yr | 10 yr | Since start | |
|---|---|---|---|---|---|---|
| PEPS official prospectus, to Dec 31, 2025 | — | +20.12% | — | — | — | +16.26% |
| S&P 500® Index (reflects no deduction for fees, expenses or taxes) index, same period | — | +17.88% | — | — | — | +14.10% |
| PEPS price data to Oct 27, 2026 | +14.2% | +14.5% | — | — | — | +16.7% |
- Over the year to Oct 27, 2026, PEPS returned +14.5%.
- Its worst full calendar year was 2025 (+20.3%); its best was 2025 (+20.3%).
- The deepest fall in its price history was 21.3% (Feb 19, 2025 to Apr 8, 2025), recovered by Jul 28, 2025.
Show as a table
| Year | Price data | Prospectus (official) |
|---|---|---|
| 2026 (to date) | +14.2% | — |
| 2025 | +20.3% | +20.12% |
| 2008 financial crisis stocks fell Oct 9, 2007 – Mar 9, 2009 | Before this security existed |
|---|---|
| 2020 COVID crash stocks fell Feb 19, 2020 – Mar 23, 2020 | Before this security existed |
| 2022 bear market stocks fell Jan 3, 2022 – Oct 12, 2022 | Before this security existed |
Dividends and income
Show as a table
| Year | Per share | Change |
|---|---|---|
| 2026 (to date) | $0.2200 | |
| 2025 | $0.2940 |
What's inside
As of Jun 30, 2026, the fund held 174 securities; the ten largest made up 36.16% of assets, and 4.73% sat in cash and money-market holdings.
| Holding | Weight | |
|---|---|---|
| NVIDIA Corp. | 6.75% | |
| Apple, Inc. | 6.37% | |
| Microsoft Corp. | 4.13% | |
| Amazon.com, Inc. | 3.43% | |
| Alphabet, Inc. Class A | 3.13% | |
| Broadcom, Inc. | 2.82% | |
| Alphabet, Inc. Class C | 2.78% | |
| Micron Technology, Inc. | 2.72% | |
| Advanced Micro Devices, Inc. | 2.12% | |
| Meta Platforms, Inc. | 1.90% | |
| Tesla, Inc. | 1.86% | |
| Eli Lilly & Co. | 1.80% | |
| JPMorgan Chase & Co. | 1.62% | |
| Lam Research Corp. | 1.51% | |
| Berkshire Hathaway, Inc. | 1.25% |
By country
United States 92.17%Ireland 2.57%Bermuda 0.17%Luxembourg 0.14%Cayman Islands 0.12%By asset type
Stocks 95.26%By sector
Sectors of the companies held, for the 83.8% of the fund in companies that have a stock page here; other holdings and cash aren't classified. Source: N-PORT holdings report as of Jun 30, 2026. Cash, money-market funds and derivatives are shown separately from the securities list.What changed recently
- Over the three months to Jun 30, 2026, investors added a net $1.6M (creations minus redemptions, per the N-PORT report).
- Monthly total returns reported for that quarter: +8.78%, +6.50%, -0.84%.
How it works
PEPS is actively managed. Its base is a stock portfolio meant to return about what the Solactive GBS United States 500 Index does. That index holds the 500 largest U.S. companies, weighted by market value, and rebalances quarterly. The fund doesn't hold all 500: an optimization process picks and weights a smaller set (174 holdings as of June 30, 2026) to match the index on traits like value, growth, size, momentum and sector.
The fund also sells S&P 500 call options that expire within about two weeks and pay off only if the index climbs past a set level. The fund collects a premium up front but gives up index gains above that level. To offset this, the fund adds extra market exposure through S&P 500 futures or options. The aim is an average beta, or market sensitivity, near 1.0, plus some added return.
The calls are generally considered “uncovered,” meaning the fund doesn't hold the exact index behind them. It keeps its stocks' overlap with the options' underlying stocks below 70% to avoid federal tax “straddle rules,” which can defer losses and raise capital gains. The extra exposure is sized to match the calls when written, so market sensitivity can drift; beta was 1.06 over the year to October 27, 2026.
What it really costs
- PEPS charges 0.1% a year.
- Of that, 0.29% is the management fee; the rest covers other fund expenses.
- The fee includes a 0.19% waiver from the adviser, which may end.
- Using the prospectus's standard example, $10,000 invested would cost about $10 in the first year and $350 over 10 years (assuming a 5% annual return).
| Cost of $10,000 (SEC example) | 1 yr | 3 yrs | 5 yrs | 10 yrs |
|---|---|---|---|---|
| PEPS | $10 | $74 | $144 | $350 |
Structure and tax notes
- Generates much of its income from selling options (directly or through notes). That income is usually taxed as ordinary income rather than as qualified dividends, and the strategy gives up some upside in strong markets.
In a retirement portfolio
It holds a broad basket of large U.S. stocks and targets market-like sensitivity, so it could fill a core stock slot, though its record is short and its size small.
PEPS could give a retirement portfolio broad exposure to large U.S. companies. It launched in November 2024, so it has no record in the 2008, 2020 or 2022 downturns. Its only full calendar year, 2025, returned 20.12%. Its deepest drop was 21.3%, from February 19 to April 8, 2025; it regained that peak about 3.6 months after the low. Cashing out near that low would have locked in the loss.
Income is modest: the yield was 0.95% as of October 27, 2026, paid quarterly, so retirees drawing cash would mostly need to part with shares. Cost is 0.10% a year after a fee waiver, but the SEC's $10,000 example rises from $10 after one year to $350 after 10, reflecting the full 0.29% management fee after the waiver period. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.
Who it may suit — and who should look elsewhere
May suit
- Investors seeking broad large U.S. stock exposure, similar to the S&P 500, for 0.10% a year after a fee waiver.
- People comfortable with derivatives: PEPS sells S&P 500 calls expiring within about two weeks and offsets them with futures and options, seeking extra return.
- Long-term holders who can sit through steep drops; PEPS fell 21.3% from February to April 2025 before regaining its peak by late July.
Look elsewhere if
- Income seekers: unlike many call-selling funds, PEPS yielded just 0.95% as of October 27, 2026, paid quarterly.
- Anyone wanting a long track record: PEPS launched in November 2024 and has no history in the 2008, 2020 or 2022 downturns.
- Those who prefer larger, more established funds: PEPS had $28.9 million in net assets as of June 30, 2026, small for an ETF.
Close alternatives
Matched by holdings overlap from the latest N-PORT reports.
No close alternatives found.
Questions investors ask
Is PEPS a covered call ETF?
Not in the usual sense. PEPS sells S&P 500 call options that expire within about two weeks, but it isn't built for high income. It adds offsetting long exposure through S&P 500 futures and options, aiming to keep its beta, or market sensitivity, near 1.0 while adding some total return. The prospectus describes these calls as generally “uncovered,” meaning the fund doesn't hold the exact index behind them. In sharp rallies, the calls can still cost it some upside.
Does PEPS pay dividends?
Yes, quarterly. PEPS passes along dividends from its stock portfolio four times a year. Payouts are small: over the 12 months to October 27, 2026, it paid about $0.32 a share, a 0.95% yield. Its objective is long-term capital appreciation, and the options strategy aims to add total return rather than large payouts, unlike many call-selling income funds.
How is PEPS different from an S&P 500 index fund?
PEPS aims to behave much like the S&P 500 but adds an options strategy. It holds a subset of stocks, 174 as of June 30, 2026, chosen to track the Solactive GBS United States 500 Index, and sells S&P 500 calls offset with futures and options. Per its prospectus, PEPS returned 20.12% in 2025 versus 17.88% for the S&P 500 Index (before any fees), and 16.26% a year versus 14.10% from its November 2024 launch through December 31, 2025. That's a short record.
What is the PEPS expense ratio?
PEPS's expense ratio, the yearly fee taken from fund assets, is 0.10%, per its prospectus filed January 28, 2026. That reflects a 0.29% management fee minus a 0.19% fee waiver. The SEC's standard example, which assumes $10,000 invested and a 5% annual return, shows costs of $10 after one year, $74 after three, $144 after five and $350 after 10. The faster rise after year one reflects the full fee applying once the waiver period ends.
What are PEPS's top holdings?
As of June 30, 2026, PEPS's largest holdings were NVIDIA (6.8%), Apple (6.4%), Microsoft (4.1%), Amazon (3.4%) and Alphabet, held through two share classes at 3.1% and 2.8%. Broadcom, Micron, Advanced Micro Devices and Meta rounded out the top 10 positions, which made up 36% of assets. Technology was about 33% of the fund, which held 174 holdings in all plus about 4.7% in cash.