J.P. Morgan launching its first exchange-traded fund
J.P. Morgan Chase & Co is launching its first exchange-traded fund on Tuesday as the Wall Street bank's asset management business makes its debut in the $1.8 trillion U.S. exchange-traded fund arena.
The JPMorgan Diversified Return Global Equity ETF is set to start trading Tuesday on the NYSE Arca under the ticker "JPGE." The launch brings J.P. Morgan Asset Management, a long-time mutual fund provider, into a fast-growing ETF market dominated by asset managers including BlackRock Inc, State Street Corp and Vanguard Group.
While J.P. Morgan has exchange-traded notes, JPGE is the firm's first ETF - funds that hold a basket of securities and trade on an exchange like stocks.
Bob Deutsch, Global Head of ETFs for J.P. Morgan Asset Management, said he sees the ETF as an extension of the firm's mutual fund business.
"First and foremost, it's part of our mutual fund product line," Deutsch said in an interview.
The firm's long-term focus is to build out an active ETF business that builds on its background as an active manager. While the first slated ETFs are in equities, Deutsch said the firm plans to expand into other asset classes. "We're working on a broad pipeline that does cut across asset classes," he said.
The new ETF will track the FTSE Developed Diversified Factor Index, a part of FTSE's broader Global Diversified Factor Index Series, which the firm developed with FTSE. The index uses a "multi-factor" approach that selects securities based on relative valuation, price momentum, low volatility and size, rather than traditional weighting by market-capitalization.
Such strategies, which straddle the line between active and passive management, have been dubbed "strategic" or "smart" beta by the industry.
Deutsch said he expects financial advisers, as well as institutional clients to use the ETF.
J.P. Morgan has also filed for plans to develop a Diversified Return International Ex-North America Equity ETF and a Diversified Return Emerging Markets Equity ETF.