JPMorgan, Other Firms File for Unique ETFs

There have been some significant exchange-traded fund filings in the past month or so, including BlackRock signaling its intent to enter the defined outcome space and the firm run by investing legend Bill Miller planning to launch its own ETFs. But those aren’t the only interesting products in the pipeline. 

J.P. Morgan 

Most notably, JPMorgan Asset Management has filed for two ETFs that will target leading firms that are nonetheless underappreciated in the technology and health care sectors, respectively. While both ETFs have similar objectives, they have different management teams and slightly different approaches.  

The JPMorgan Healthcare Leaders ETF (JDOC) will invest primarily in U.S. companies, but the prospectus notes that it can also invest in companies in developed and emerging foreign markets. The fund’s managers will rely on J.P. Morgan’s in-house health care specialists’ input to select companies with large addressable markets, wide moats, strong management and the ability to generate sustained earnings. Although the fund can invest across the market capitalization spectrum, the fund document says it will primarily hold midcap and large cap companies. 

Meanwhile, the JPMorgan U.S. Tech Leaders ETF (JTEK) will focus on U.S. stocks and specifically target the internet, semiconductor, software, computer, alternative energy and automobile industries. Unlike JDOC, the tech fund is focused on those companies with disruptive business models rather than sustained earnings. JTEK’s prospectus does not specify that it will leverage JPMorgan’s global research teams; instead, stock selections will be based on the manager's research. 

Actively managed sector funds are rare, and it’s not clear that these funds will fall within traditional sector boundaries as defined by something like the Global Industry Classification Standard. What stands out even more is that although the funds make no mention of it in their names, both funds include ESG considerations in the evaluations of opportunities and risks, though there are no specific requirements.  

Global X 

Global X has filed for two actively managed funds, despite mainly being known for its passive strategies. The funds, which target the markets of Brazil and India, will invest in companies domiciled in the country of focus or that are economically tied to that country. 

The Global X India Active ETF and the Global X Brazil Active ETF will focus on companies that have wide moats, are likely to benefit from the macro environment over the long term, and have a management approach and philosophy that the managers believe is likely to be additive to shareholder value, according to the prospectuses. 

Avantis 

American Century’s ETF arm, Avantis, is planning to launch six new funds covering a range of asset classes. Those funds and their expense ratios are as follows:  

• Avantis All Equity Markets Value ETF (AVGV), 0.26% 
• Avantis International Small Cap Equity ETF (AVDS), 0.30% 
• Avantis Moderate Allocation ETF (AVMG), 0.21% 
• Avantis Total International Markets Equity ETF (AVTD), 0.31% 
• Avantis Total International Markets Value ETF (AVTV), 0.34% 
• Avantis U.S. Large Cap Equity ETF (AVLC), 0.15% 

While AVDS and AVLC both target securities within their opportunity sets that offer exposure to the size, value and profitability factors, the remaining funds in the filing are all ETFs-of-ETFs that invest in other Avantis ETFs.  

The new funds will bring the total number of ETFs in the Avantis lineup to 24.  

ProShares 

The firm that launched the first U.S.-listed bitcoin futures ETF, the $918.3 million ProShares Bitcoin Strategy ETF (BITO), has filed for the ProShares UltraBitcoin Strategy ETF. The fund will aim to provide twice the daily performance of the underlying S&P CME Bitcoin Futures Index.   

ProShares also launched the $137.4 million ProShares Short Bitcoin Strategy ETF (BITI) last June. The leveraged bitcoin fund will be the first of its kind. And at a time when bitcoin seems to be on an upward tear, with year-to-date gains for BITO of more than 65%, a fund offering leveraged exposure to the asset could appeal to many. 

Simplify 

Simplify, which is known primarily for its actively managed options-based strategies, is planning to roll out a blue chip equity ETF that relies on one of the approved nontransparent active management models.  

The Principal Focused Blue Chip ETF (BCHP) will invest in companies that are large, well-established and financially sound, while falling among the top three companies in their respective sectors and being considered household names. Holdings will typically fall within the market capitalization range of the Russell 1000 Growth Index and be selected using a fundamental bottom-up approach, the prospectus says.  

BCHP will not disclose its holdings on a daily basis, but it will publish a daily tracking basket that will include a few select securities from the actual portfolio as well as highly liquid ETFs that have similar portfolio characteristics to the rest of the portfolio and cash equivalents, according to the fund document.  

It will have an expense ratio of 0.58%. 

BondBloxx 

An issuer that debuted last year with an exclusively fixed income lineup has plans to launch another ETF that will bring its offering up to 20 different funds. The BondBloxx USD High Yield Bond Sector Rotation ETF will be the issuer’s first actively managed fund and will invest primarily in the existing fixed income sector ETFs the firm offers. Those vehicles include the following: 

• BondBloxx USD High Yield Bond Industrial Sector ETF (XHYI),  
• BondBloxx USD High Yield Bond Telecom, Media & Technology Sector ETF (XHYT) 
• BondBloxx USD High Yield Bond Healthcare Sector ETF (XHYH)  
• BondBloxx USD High Yield Bond Financial & REIT Sector ETF (XHYF)  
• BondBloxx USD High Yield Bond Energy Sector ETF (XHYE) 
• BondBloxx USD High Yield Bond Consumer Cyclicals Sector ETF (XHYC)  
• BondBloxx USD High Yield Bond Consumer Non-Cyclicals Sector ETF (XHYD) 

The fund has an expense ratio of 0.55% after a waiver is applied. 

Roundhill 

Roundhill is looking to add to the “BIG” lineup that it began launching a weeks ago. The Roundhill Big Bank ETF (BIGB) is the first in the series and covers about seven banking stocks with swaps tied to the same stocks used to provide additional diversification and exposure. All of the funds in the series will follow a similar format, with more funds expected that cover the technology, airlines, defense, oil and railroad industries.  

The latest filing from Roundhill indicates there are plans to launch more funds in a similar vein that cover the pharmaceuticals, homebuilders and retail industries.  

Dimensional 

Dimensional Fund Advisors will take its ETF lineup in a new direction when it launches the Dimensional California Municipal Bond ETF. The fund will be the first California municipal bond ETF in the Dimensional family of ETFs, though the firm offers three mutual funds targeting different slices of the California municipal bond market as well as mutual funds covering the muni markets of New York and Minnesota in addition to the broader U.S. 

The prospectus notes that the fund will aim for a dollar-weighted average duration within six to 12 months of that of the S&P Intermediate Term California AMT-Free Municipal Bond Index, the fund’s benchmark.  

Contact Heather Bell at [email protected]