JP Morgan unveils first European ETFs

Added 10th October 2017

JP Morgan Asset Management (JPMAM) will launch its first two European ETFs “imminently”. Both ETFs will be actively managed, and will compete with traditional hedge funds, the company said.

JP Morgan unveils first European ETFs

JPMAM has decided to avoid the crowded, low-margin world of plain vanilla, index-tracking ETFs, attempting instead to carve itself a niche in the alternative beta space.

The two new ETFs are factor-based, actively managed strategies which aim to bring “the diversification benefits of hedge funds” to a wider audience in a more liquid ETF-wrapper. JPMAM didn’t give any information about the fees it will charge for them,

Bottom-up approach

The JPM Equity Long-Short Ucits ETF aims to provide exposure to value, quality, and momentum within developed global equity markets using a rules-based bottom-up approach, taking long and short positions in individual equity securities. 

Meanwhile, the JPM Managed Futures Ucits ETF seeks to provide “systematic exposure to carry and momentum factors” across four asset classes: equities, fixed income, currency, and commodities. 

The strategy will also be constructed bottom-up by taking long and short positions in futures markets, aiming to provide returns uncorrelated to traditional asset classes. 

"A large portion of hedge fund returns could actually be accessed using a bottom-up, systematic, rules-based approach – the same way traditional passive investing in long-only markets works" - Yazann Romahi

Hedge fund rivals

While traditional ETFs can be understood as competing with traditional, long/only funds, JPM's  active ETFs are to challenge hedge funds, said Yazann Romahi, chief Investment officer of quantitative beta strategies at JPMAM. 

“When we started doing research on alternatives more than a decade ago, we built on the academic research which suggested that a large portion of hedge fund returns could actually be accessed using a bottom-up, systematic, rules-based approach – the same way traditional passive investing in long-only markets works.

“Now we’re looking to bring the same benefits of diversification, reduced overall portfolio volatility, and higher portfolio risk-adjusted returns to the ETF wrapper through the launch of these two ETFs.” 

Bryon Lake, international head of ETFs at JPMAM, said: “This first wave of ETF listings is the next step in our commitment to building out our active, strategic beta and alternative beta ETF capabilities, with a view to serving the needs of clients globally. We intend to build on this momentum going into 2018 as we introduce more of JPM AM’s investment capabilities into the ETF vehicle.” 

The two ETFs will launch on the London Stock Exchange within the next few weeks, the group said.

 

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Tjibbe Hoekstra

Senior Reporter

Tjibbe joined Expert Investor as a senior reporter in March 2014. Before moving to London he worked as a financial news reporter for various news outlets in Amsterdam, including Reuters and ANP, the main news agency in the Netherlands. He also worked for Fondsnieuws, a website and magazine for finance professionals in the Netherlands. Tjibbe holds a MSc in Public Administration and a post-graduate diploma in Journalism.

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