Daily ETF Watch: JPM Gets Active Approval

The Securities and Exchange Commission recently issued an order with respect to J.P. Morgan allowing “actively managed series of certain open-end management investment companies to issue shares.” The order means that the financial services giant can provide active strategies in an ETF wrapper.

Although known primarily as an active manager, J.P. Morgan had entered the ETF arena by rolling out a series of index-based multifactor funds. While not actually active, the smart-beta strategies also don’t much resemble plain-vanilla cap-weighted index products.

The approval from the SEC does not allow for nontransparent ETFs. Rather than publishing its holdings on a periodic basis, like a regular actively managed mutual fund would, J.P. Morgan’s active ETFs will have to provide daily transparency, just like an index-based ETF.

In late December, the firm applied for the JPMorgan Diversified Alternative ETF, an actively managed ETF that will seek to replicate hedge-fund-style strategies. The recent SEC order clears the way for the fund’s launch.

Contact Heather Bell at [email protected].