Daily ETF Watch: JP Morgan Debut Nears

May 22, 2014

The huge U.S. bank has updated paperwork on its proposed ‘smart beta’ international equity ETF.

J.P. Morgan has updated regulatory paperwork to include fees and tickers for its proposed “smart beta” fund called the JPMorgan Diversified Return International Ex-North America Equity ETF (JPIN), a clear sign the eighth-largest bank in the world by assets is on the verge of joining the vibrant world of exchange-traded funds.

The ETF will likely be going live at a time when issuers are slicing and dicing the broader market indexes in an attempt to offer investors alternatives to straight-laced market-cap offerings such as the SPDR S&P 500 ETF (SPY | A-97). J.P. Morgan has made clear that it built its reputation in the fund business on active management, and its foray into ETFs will build on that reputation. It has also made clear that its focus on “smart beta” indexing strategies reflects its legacy focus on active management.

JPIN will track the FTSE Developed ex North America Diversified Factor Index, which comprises large- and midcap equity securities in developed markets outside of North America. The rules-based multifactor selection process uses the following characteristics: relative valuation, price momentum, low volatility and specific market capitalization, according to its regulatory filing.

The fund has an expense ratio of 0.43 percent, or $43 for every $10,000 invested.

Filing

In other news reflecting a growing focus on active management in the ETF industry, Philadelphia-based Innovator Management filed paperwork seeking permission to market “transparent” actively managed ETFs that would disclose portfolio holdings daily.

Innovator’s first proposed ETF will be called the Innovator IBD 50 ETF, which will invest primarily in equity securities listed on North American exchanges, according to the filing.

 

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