Daily ETF Watch: JP Morgan Era To Begin

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June 16, 2014
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The banking giant sets the long-awaited launch date for its first ETF.

J.P. Morgan on Tuesday, June 17, is launching its first ETF, a smart-beta fund called the JPMorgan Diversified Return Global Equity ETF (JPGE). The rollout begins the bank’s long-awaited foray into the world of exchange-traded funds that’s widely expected to pump life into actively managed portfolios.

The bank made clear in an interview with ETF Report that its presence in the world of ETFs will build on its reputation as an active asset manager. It included in its definition of active management funds like the one that is launching tomorrow. The fund is an index strategy, yet has a quasi-active tilt designed to outperform market-cap-weighted index funds.

The company’s first fund will track the FTSE Developed Diversified Factor Index, which comprises equity securities from developed global markets selected to represent a diversified set of factor characteristics, including relative valuation, price momentum, low volatility and specific market capitalization, according to the filing.

The launch comes at a time when many analysts reckon that the popularity of actively managed ETFs is possibly on the brink of growing dramatically. At the very least, there’s no doubt that J.P. Morgan has the marketing muscle to promote its lineup of funds as aggressively as any firm already established as an ETF issuer.

That marketing power alone should raise the profile of active ETFs. The vast majority of ETFs and ETF assets under management are in indexed strategies, though so-called smart beta funds like the one J.P. Morgan is bringing to market tomorrow have been gaining in popularity in the past few years.

JPGE’s annual expense ratio will be 0.38 percent, or $38 for every $10,000 invested, according to a regulatory filing.

The fund launch was announced via a NYSE communique.

Filing

KraneShares has updated regulatory paperwork on a China-focused ETF to invest in investment-grade, on-shore renminbi-denominated bonds to give investors exposure to fixed income in the world’s second-largest economy.

China’s mainland equity and fixed-income securities continue to interest issuers and investors alike, who see the potential for outsized returns via direct access to the slowing, but still-growing, Chinese market.

The KraneShares E Fund China Commercial Paper Hedged ETF (KEEP) will track the CSI Diversified High Grade Commercial Paper Index and will be subadvised by E Fund Management based in Hong Kong. The index will be composed of commercial paper issued by sovereign, quasi-sovereign and corporate issuers in the People’s Republic of China.

The fund has a proposed expense ratio of 0.68 percent, or $68 for every $10,000 invested.

 

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