JPMorgan Launches New $2B High-Yield ETF
- The JPMorgan Active High Yield ETF launches with a $2 billion anchor investment.
- The fund targets below-investment-grade debt securities and has a 0.45% expense ratio.
- It marks the largest active ETF launch in history, according to JPMorgan.
JPMorgan Chase & Co. (JPM) launched the JPMorgan Active High Yield ETF (JPHY) with a $2 billion anchor investment from an institutional client, marking what the company calls the largest active ETF launch in history, according to a press release.
JPHY Expands Active Fixed-Income Offerings
The launch comes as active fixed-income ETFs gain traction among investors seeking alternatives to passive strategies in the high-yield bond market. JPMorgan Asset Management manages $55 billion in active fixed-income ETFs and has attracted approximately $10 billion in flows year to date, according to the press release.
The high-yield ETF launch represents JPMorgan's push to expand its active management offerings in fixed-income markets, where the firm expects active fixed-income ETF assets under management to quadruple over the next five years, according to the press release.
"JPHY reinforces our commitment to deliver incremental return opportunities in fixed income, a market segment that has been dominated by passive strategies," Robert Michele, global head of fixed income for J.P. Morgan Asset Management, said in the press release.
High-Yield ETF Strategy Details
The fund invests at least 80% of its assets in bonds and other debt securities rated below investment grade, comes with a 0.45% expense ratio and trades on the Cboe BZX Exchange, according to the prospectus. JPHY benchmarks against the ICE BofA US High Yield Constrained Index and aims to deliver current income as its primary objective.
The fund can invest up to 100% of its assets in below-investment-grade securities, including distressed debt from companies experiencing financial difficulties or bankruptcy proceedings, according to the prospectus. The portfolio management team includes Robert Cook, Thomas Hauser, Jeffrey Lovell, John Lux, and Edward Gibbons.
The fund may also invest in convertible securities, preferred stock, common stock and privately placed securities, according to the prospectus. The average weighted maturity will ordinarily range between three and 10 years, though it may shorten to two years for defensive purposes.
JPMorgan Asset Management manages $3.7 trillion in assets as of March 3 and is the largest U.S. active fixed-income ETF provider, according to the press release. The $2 billion initial scale could help attract new investors and result in improved liquidity and lower trading costs.
