J.P. Morgan Asset Management today announced the launch of a new actively managed hedged equity ETF. The JPMorgan Hedged Equity Laddered Overlay ETF (NYSE Arca: HELO) invests in U.S. large-cap equities with a laddered options overlay. HELO seeks to provide downside protection while foregoing some upside potential.
HELO seeks to capture a significant portion of the U.S. equity market returns with lower volatility than traditional equity strategies over the long term. According to JPMAM, this should lead to competitive risk-adjusted returns.
The outcome-oriented ETF uses the same team and philosophy as the JPMorgan Hedged Equity Mutual Fund Series. Hamilton Reiner, portfolio manager and head of U.S. equity derivatives, and Raffaele Zingone, a portfolio manager in the U.S. equity core group, will manage the fund.
“Regardless of the environment, equity investors are focused on managing risk,” Reiner said. “We expect strong demand for HELO as investors look for outcome-oriented solutions that provide the hedged experience through the ETF wrapper.”
HELO’s laddered hedge overlay consists of three hedges lasting three months that are each staggered one month apart. This laddered hedging approach aims to provide downside protection and upside capture.
A Growing Suite of Active ETFs
HELO joins a growing suite of active ETFs from JPMAM that includes the JPMorgan Equity Premium Income ETF (JEPI ) and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ ). And the firm has been seeing growing interest in these active funds. In fact, JEPI alone has seen nearly $1 billion in inflows over the past month.
“JPMorgan has established market leadership with actively managed ETFs,” said VettaFi’s head of research Todd Rosenbluth. “Their continued product expansion, which taps into in house expertise, is likely to be well received by advisors.”
Global head of ETF solutions Bryon Lake said the firm launched HELO to accommodate client demand.
“We listen to our clients,” Lake said. “And their request is to have a strategy like this available in the ETF wrapper. Hamilton and team have demonstrated strong success with active ETFs like JEPI and JEPQ.”
Added Lake: “HELO is a great addition to our active ETF family.”
HELO carries an expense ratio of 50 basis points.
JPMAM had $2.8 trillion in total assets under management as of June 30.
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