Over the past 18 months, J.P. Morgan has built an ETF business to be reckoned with. Using a "bring your own assets" approach, in which the asset manager has shifted existing clients into house-brand products, J.P. Morgan has seen assets under management (AUM) for several of its core ETFs balloon into the billions.
It all started last summer, with the J.P. Morgan BetaBuilders Japan ETF (BBJP); in July 2018, the fund set a record for the second-fastest time to hit $1 billion in assets, a record that was smashed a few weeks later by the J.P Morgan BetaBuilders Canada ETF (BBCA) (read: "New Canada ETF 2nd Fastest To $1B").
Curiously, however, the J.P. Morgan BetaBuilders MSCI U.S. REIT ETF (BBRE), which launched the same day as BBJP, hasn't seen the same massive inflows—until now.
Over the course of the year, BBRE has taken in $851 million in new AUM. That new money has mostly come in small batches, though there have been a few $100 million inflow days here and there.
Then on Tuesday, Nov. 12, BBRE saw its biggest one-day flow ever: $325 million. That haul finally pushed the fund over the $1 billion AUM mark:
Source: ETF.com; data as of Nov. 14, 2019.
Why Real Estate Now
To some extent, it's no surprise BBRE would eventually attract assets: With roughly $3 trillion in AUM, J.P. Morgan has a substantial built-in user base for the fund among its own clients.
Even without that, there's a good case to be made that BBRE is benefitting from being the right product at the right time.
BBRE tracks a market-weighted index of small-, medium- and large-cap U.S. real estate stocks, using an index that once underpinned the uber-popular Vanguard Real Estate ETF (VNQ). (Read: "ETF Of The Week: Real Estate Fund Sees Big Demand.")
Real estate has been the second best-performing market sector of 2019, with its performance propelled by the engine of falling interest rates. Furthermore, REITs are currently offering enticing yields that far outpace those offered by Treasuries and other fixed income investments (read: "Best Performing Real Estate ETFs").
BBRE vs. VNQ
BBRE is a single basis point cheaper than VNQ, but VNQ has outperformed BBRE year-to-date, returning 28% compared with BBRE's 24% rise.
That performance difference may stem from BBRE's greater emphasis on commercial REITs. BBRE dedicates more than half its portfolio (52%) to commercial real estate stocks, such as self-storage and mall developer REITs, while VNQ allocates 41%.
Contact Lara Crigger at [email protected]