JPMorgan's New Income-Focused ETF Helps Manage Volatility
The new multi-asset fund invests in ETFs and individual securities for a 75-25 risk profile.
The JPMorgan Flexible Income ETF (JFLI), which started trading on Feb. 13, comes to market with a broad investment mandate and a portfolio management team that is open to investing across all asset classes and geographies.
“We intend to move to where the opportunities are, whether that means emerging market debt or real estate,” said Michael Schoenhaut, one of three JFLI portfolio managers.
“We’re going to move around pretty actively,” he added.
With a focus on income, Schoenhaut said JFLI is designed to “put all the sources of yield together, across asset classes, combining equities and fixed income.”
Multi-Assets a $500 Billion Opportunity
As part of the announcement, J.P. Morgan described the multi-asset category as a “$500 billion opportunity.”
JFLI, which has an expense ratio of 35 basis points, is starting with a two-third allocation to four JPMorgan ETFs and the remaining third spread across customized sleeves of individual securities.
The underlying ETFs, in order of their weighting in the portfolio, are the JPMorgan BetaBuilders USD High Yield Corporate Bond ETF (BBHY), the JPMorgan Income ETF (JPIE), the JPMorgan Equity Premium Income ETF (JEPI) and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ).
Schoenhaut said the underlying ETF weighting will likely remain at the current level, and that the risk profile of JFLI is comparable to a portfolio of 75% stocks and 25% bonds.
However, he added, even with that much equity market exposure, “an income approach helps with volatility management.”
Nate Geraci, president and founder of The ETF Store in Overland Park, Kansas, described the timing of the JFLI debut as “ideal given that greater uncertainty has recently been injected into the markets.”
“Investors are grappling with the potential impact of shifting policies on trade and immigration, the direction of inflation and interest rates, geopolitical risks and other factors,” he added. “Multi-asset solutions can be attractive to investors in this environment as a way to still participate in markets, while also managing risk.”
JPMorgan manages 65 ETFs that combine for more than $165 billion.
