JP Morgan Asset Management (JPMAM) has listed JPM China A Research Enhanced Index Equity (ESG) UCITS ETF (JREC) on the London Stock Exchange, Deutsche Börse Xetra and SIX.
The firm said the product is the industry’s first active China equities ETF and is an expansion of the firm’s range of active Research Enhanced Index (REI) Equity (ESG) ETFs.
JPMAM’s range of REI ETFs seeks to offer investors active ETFs that can serve as building blocks for core allocations. By seeking positive alpha at a low tracking error, JPMAM’s actively-managed equity ETFs offer an attractive alternative to pure passive investments.
The range also leverages JPMAM’s expertise and track record in REI investing, based on proprietary research in which JPMAM’s research team, comprising over 90 fundamental research analysts, who provide stock-specific insights to JPMAM portfolio management teams.
Using this information, the portfolio managers then take small overweight positions in names they find attractive and small underweights in the names they find less attractive. As a result, JPMAM’s REI portfolios maintain index characteristics while seeking incremental positive excess returns, compounded over time, in a risk-managed environment.
When it comes to onshore Chinese equities, or A-shares, the role of active management, including active ETFs, can play an important part in navigating this deep, liquid, and diverse market, by helping investors to gain exposure to the long-term trends driving the growth potential of China’s onshore market, as the consumption needs of China’s growing middle class continues to expand and evolve.
Moreover, where passive investments may be unable to mitigate the impact of the onshore market’s high turnover, including near-term periods of investor exuberance and pessimism, JREC is instead designed to exploit these market inefficiencies through a long-term investment lens, using local market knowledge as well as a rigorous valuation and ESG framework.
Olivier Paquier, head of ETF distribution in EMEA, said: “Despite being one of the largest and fastest-growing economies in the world, investors’ exposure to onshore Chinese equities, remains relatively low. With the average international investor’s total China exposure currently 4.6% of total assets, and a large part of this is likely to be in offshore Chinese equities through emerging markets equity strategies, JREC can help investors find a balance in the representation of Chinese equities in their portfolios. They will now be able to capture China A shares opportunities, in a simple, easy-to-trade and attractively-priced active ETF for the first time.”
In addition to the launch of JREC, JPMAM has also listed JPM AC Asia Pacific ex Japan Research Enhanced Index Equity (ESG) UCITS ETF (JREA), which will be benchmarked against the MSCI AC Asia Pacific ex Japan Index. Both JREC and JREA, classified as Article 8 under the SFDR regulation, are now available on the London Stock Exchange, Deutsche Börse Xetra, and SIX, and scheduled to list on the Borsa Italiana on 22 February 2022.
JREC and JREA will be managed by Lina Nassar and Sonal Tanna and have a Total Expense Ratio of 40 basis points and 30 basis points, respectively. The two new ETFs join JPMAM’s existing range of REI ETFs (JREE, JREM, JREG and JREU), which have a combined AUM of $2.5 billion as of 14/02/22.
