ETF Watch: Active Alts Funds Planned

July 19, 2017

A new filing from J.P. Morgan outlines the firm’s plans for two actively managed alternatives ETFs. The JPMorgan Equity Long/Short ETF and the JPMorgan Managed Futures ETF will implement investment strategies that are built around factors.

The long/short fund will seek to provide low-correlation returns via exposure to the value, momentum, size and quality factors by taking long positions in stocks that are attractive based on those factors and shorting the ones that are unattractive. The fund can invest in foreign stocks, not just domestic ones, and it can hedge currencies if that is warranted by the market conditions. It also can make use of a variety of derivatives to meet its investment objectives, according to the prospectus.

Managed Futures

Meanwhile, the managed futures fund will invest in futures tied to equities, fixed income, currency and commodities as opportunities are identified. The fund will seek to exploit sources of return that have low correlations to each other and to traditional markets, the prospectus said.

It will do this by gaining exposure to return factors such as momentum and carry trades and will use long/short strategies to achieve its goals. Similar to the other fund, the managed futures ETF will use derivatives in its strategies. It will also rely on an offshore subsidiary to invest in commodity futures; the subsidiary can represent up to 15% of the fund’s total assets.  

J.P. Morgan already offers the JPMorgan Diversified Alternatives ETF (JPHF), an alternatives fund that launched in 2016 and currently has $90 million in assets under management. JPHF is also actively managed and relies on several strategies that are popular with hedge funds: equity long/short, event driven and global macro.

The recent filing did not include expense ratios, tickers or a listing exchange.

Contact Heather Bell at [email protected].

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