JP Morgan To Convert 4 Mutual Funds

August 11, 2021

Joining the likes of Guinness Atkinson and Dimensional Fund Advisors, J.P. Morgan has announced it aims to convert four of its mutual funds into ETFs, subject to board approval. The transition is expected to complete in 2022.

The affected funds and their assets under management as of June 30 are as follows:

  • JPMorgan International Research Enhanced Equity Fund (OEIAX, $5.0 billion)
  • JPMorgan Market Expansion Enhanced Index Fund (OMEAX, $1.1 billion)
  • JPMorgan Realty Income Fund (URTAX, $2.2 billion)
  • JPMorgan Inflation Managed Bond Fund (JIMAX, $1.4 billion)

That is equal to $9.7 billion in assets under management in aggregate. Notably, the conversions will all be to transparent actively managed ETF structures rather than the nontransparent active structures that debuted last year.

Precedents

Near the end of March 2021, Guinness Atkinson converted its Guinness Atkinson Dividend Builder Fund (GAINX) and the Guinness Atkinson Asia Pacific Dividend Builder Fund (GAADX) into the SmartETFs Dividend Builder ETF (DIVS) and the SmartETFs Asia Pacific Dividend Builder ETF (ADIV), respectively.

Shortly after that, in mid-June, DFA rolled out the Dimensional U.S. Equity ETF (DFUS), the Dimensional U.S. Core Equity 2 ETF (DFAC), the Dimensional U.S. Small Cap ETF (DFAS), and the Dimensional U.S. Targeted Value ETF (DFAT). All four had been converted from mutual funds worth a total of roughly $30 billion.

DFA has also launched ETFs that merely replicate strategies of some of its existing mutual funds, but the four mutual funds that converted to ETFs were chosen because of their tax-managed strategies. With its tax advantages, the ETF wrapper was simply a better choice for such mutual funds.

J.P. Morgan seems to have a similar motivation:

"As a leading active manager, it is important to us that we continue to deliver our investment capabilities in the vehicle that meets our clients' desired outcomes," said Bryon Lake, the firm’s head of Americas ETFs.

"The intraday liquidity, transparency and potential tax benefits that come with ETFs carry significant value to many investors, and these particular strategies are well suited for the ETF structure," he added.

Total Offering

The firm’s ETF family includes 36 ETFs with $64 billion in assets under management, while its mutual fund offering has 129 funds representing $899 billion in assets.

In conjunction with its conversion bombshell, the issuer further stated that it would combine the boards of its ETFs and mutual funds into a single common board of 16 members. Like the mutual-fund-to-ETF conversions, the board changes will be subject to a shareholder vote.     

Contact Heather Bell at [email protected]

Find your next ETF

Reset All