JPMorgan Asset Management is looking to deliver its active capabilities to its clients through exchange traded fund technology, said global head of ETF solutions Byron Lake at Exchange: An ETF Experience 2022.
Speaking with VettaFi Editor-in-Chief Lara Crigger for ETF Leaders, powered by the New York Stock Exchange, Lake cites the actively managed JPMorgan Equity Premium Income ETF (JEPI ) as a good example of offering such capabilities to its clients through the ETF wrapper. JEPI “owns quality U.S. equities but then has a covered call element over it as well,” which Lake believes can provide investors with “some good income.”
When the interview was conducted in April, JPMAM had converted its JPMorgan Inflation Managed Bond Fund (JIMAX) into the JPMorgan Inflation Managed Bond ETF (JCPI ) as part of its plan to switch four mutual funds into ETFs. “It went to bed a mutual fund on Friday and woke up an ETF on Monday,” Lake said.
“We think that’s great for investors to have those capabilities, this strategy in an inflation managed bond strategy, and now it’s in the ETF wrapper,”Lake added. “It’s intraday liquid, it’s transparent, and we actually lowered the expense ratio on the product when we moved it over.”
Lake also said that while “there’s a lot of uncertainty in the market right now” and that there are “a lot of different moving pieces that investors are concerned about… A couple of things always remain the same.” One of those things is that “investors that are looking for income as the outcome.” To serve that need, JPMAM has JEPI, as well as two ultra-short strategies, the JPMorgan Ultra-Short Income ETF (JPST ) and the Ultra-Short Municipal Income ETF (JMST ), which can appeal to investors who “are pulling in their duration but yet still want to get some of that income.”
And while both active and passive ETFs “play a big role in portfolios,” Lake noted that active management “can adapt when the market changes” in real time, while an index fund cannot.
“Because of active management, the investors are able to change when the market environment changes,” said Lake. “So, if it’s a fixed income strategy and we’re worried about duration, maybe they can pull their duration in. If they’re seeing the market on the equity side rotate from one sector to the next, maybe they adapt the portfolio to do that as well.”
When championing JPMAM’s active ETFs, Lake pointed out that “every single security that’s in a JPMorgan ETF” was placed there from “an investor that intentionally bought that security in that portfolio."
“They did the research, they understood the balance sheet, they know the company forward and backward,” Lake said. “We’ve got analysts around the world, we’ve got a significant research budget, we are doing the due diligence on these companies and making sure that we’re specifically selecting them to go in the portfolio.”
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