JP Morgan Plans Global Equities ETF

October 23, 2013

A noteworthy regulatory filing from J.P. Morgan could bring the firm’s first ’40 Act ETF to market.

J.P. Morgan filed regulatory paperwork detailing an indexed exchange-traded fund focused on developed-country global equities with a view toward certain factor tilts, in what appears to be the big bank’s first-ever ETF that will be registered under the Investment Company Act of 1940.

The JPMorgan Global Equity fund is a broad index strategy focused on stocks around the world, again in the developed markets. J.P. Morgan first requested permission to offer ETFs in 2010, but has been slow in actually bringing products to market.

Total assets in U.S.-listed ETFs reach a record $1.639 trillion yesterday, further supporting views that the juggernaut isn’t likely to slow down anytime soon. Still, it’s not clear that as big and influential as J.P. is, that the bank will gain traction in the world of ETFs, where so many pure-beta index strategies have already been accounted for. That said, the proposed fund’s index methodology could distinguish it a bit.

Even though J.P. Morgan isn’t a significant player in the world of exchange-traded products, it does have a noteworthy presence.

For example, it currently backs the JP Morgan Alerian MLP ETN (AMJ), the second-largest U.S.-listed MLP exchange-traded product, which currently has $5.8 billion in assets.

The bank has also filed to offer a physical copper ETF, but it’s not yet live and, also, it’s structured as a grantor trust rather than a typical ’40 Act fund like the vast majority of ETFs.

The proposed global equities ETF will track an as-of-yet unspecified index using a sampling method of security selection.

The benchmark will comprise mid- to large-cap securities from developed countries worldwide, and will select constituents on attractive relative valuation, positive price momentum, low volatility and specific market capitalization, among possible other factors.

The fund doesn’t yet have a ticker or price tag, nor did J.P. Morgan say on what exchange it will have its primary listing.

 

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