J.P. Morgan Asset Manager (JPMAM) has launched three actively managed corporate bond research enhanced index ETFs and a fourth active equity research enhanced index ETF. They are available on the London Stock Exchange, Deutsche Boerse Xetra and Borsa Italiana.
The three bond research ETFs and the equity research ETF are called the EUR Corporate Bond Research Enhanced Index UCITS ETF(JREB), EUR Corporate Bond 1-5yr Research Enhanced Index UCITS ETF(JR15), Corporate Bond Research Enhanced Index UCITS ETF (JRUB) and the Global Emerging Markets Research Enhanced Index Equity (ESG) UCITS ETF (JREM).
The three bond research ETFs offer an alternative to passive corporate bond market investing. These new ETFs will focus on identifying the most attractive opportunities on a risk adjusted basis so that investors are not exposed to uncompensated inherent risks in passive investing.
According to JPMAM “The investment teams will apply JPMAM’s proprietary credit research to identify the issuers that are attractive on a risk-adjusted basis and take overweight positions in names the credit research analysts find attractive and underweight positions in the names they don’t. As a result, the portfolios will maintain index-like characteristics while seeking incremental positive excess returns, compounded over time.”
JPMAM’S investment grade (IG) credit portfolio management team is supported by 20 dedicated credit research analysts, with over 15 years of average experience managed by Lisa Coleman. Ms Coleman manages over $50 billion of ESG-integrated investment grade portfolios.
The JREB will be benchmarked against the Bloomberg Barclays Euro Aggregate Corporate Index, the JR15 against the Bloomberg Barclays Euro Aggregate Corporate 1-5 Index and the JRUB against the Bloomberg Barclays US Corporate Investment Grade Index. All three ETFs will have a Total Expense Ratio (TER) of 19 basis points.
The JREM will be benchmarked against the MSCI Emerging Market Index and have a TER of 30 basis points. It will also offer “investors an index-like portfolio but with the added information advantage of insights from over 30 emerging markets Asia Pacific research analysts.”
Bryon Lake, head of international ETFs at JPMAM, said: “This is the first time our ESG-integrated corporate research enhanced index (“CREI”) approach is being made available in a UCITS format. Given our long track record in managing CREI strategies for institutional investors, we’re excited to bring this expertise to the European ETF market.
“Corporate bonds play an integral role in a well-diversified portfolio. However, as we near the end of the credit cycle, avoiding uncompensated risks through intelligent sector and security selection can help deliver even stronger risk-adjusted returns.
“In speaking to clients, they want the benefits of passive investing and ETFs but acknowledge that investment grade indices have their limitations. Offering attractively priced investment grade credit active capabilities, in the ETF wrapper, provides European investors with an interesting alternative.”
JPMAM has $1.7 trillion in assets under management.
