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J.P Morgan Asset Management launches GBP hedged version of US Treasury bond fund

News Team, 22/05/2019

J.P. Morgan Asset Management (JPMAM) has launched a GBP hedged version of its JPM BetaBuilders US Treasury Bond UCITS ETF fund (BBTR). It is now available on the London Stock Exchange. Fundeye wrote about the launch of these products earlier this month.

The fund, JPM BetaBuilders US Treasury Bond UCITS ETF – GBP Hedged (BBTP), aims to provide investors with liquid, low-cost beta exposure to dollar-denominated Treasury bonds issued by the U.S. government across the full yield curve, much like its BBTR counterpart. It will closely track the J.P. Morgan Government Bond Index United States, and will utilise JPMAM’s experience with index replication, portfolio management and scale in custom technology solutions. BBTP will have a Total Expense Ratio (TER) of 10 basis points.

John Adu, co-head of ETF Distribution at J.P. Morgan Asset Management, believed that the development of a GBP hedged version showed the asset manager responding to client demands and the desire of allocators for more balanced portfolios.

He said: “We’re continuing to listen to and respond to clients’ needs for a range of cost-efficient solutions that are geared towards this late cycle environment. This includes currency-hedged ETFs which can help asset allocators create more balanced portfolios, as they seek to navigate an evolving macro backdrop.”

Mike Bell, Global Market Strategist at J.P. Morgan Asset Management, said the launch of the GBP hedged fund was representative of investor demands for resilient portfolios in case of potential future economic downturns.

He said: “While the timing of the next downturn remains uncertain, many investors are starting to add in some portfolio hedges to help balance the riskier assets in their portfolio, as we move later into the economic cycle. By including some treasuries, investors are seeking to create a more balanced portfolio and help reduce overall portfolio losses when the next economic downturn eventually arrives. For UK investors thinking about incorporating US government bond exposure, they may want to consider hedging the currency risk, given the uncertainty around the outlook for sterling against the dollar.”

J.P. Morgan Asset Management has assets under management of $1.7 trillion. It provides investment management services in equities, fixed income, real estate, hedge funds, private equity and liquidity.

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