JP Morgan introduces unconstrained fixed income ETF

Apr 11th, 2017 | By | Category: Fixed Income

JP Morgan Asset Management has launched the JP Morgan Global Bond Opportunities ETF (Bats: JPGB), an actively managed ETF seeking fixed income opportunities across market sectors, credit quality, countries and currencies, extending beyond traditional bond investments.

JP Morgan introduces unconstrained fixed income ETF

Robert Deutsch, Global Head of ETFs for JP Morgan Asset Management.

Built off the success of the JPMorgan Global Bond Opportunities Fund, the ETF captures JP Morgan’s highest conviction ideas in a flexible strategy that identifies opportunities in response to evolving market conditions.

According to JP Morgan, the unconstrained nature of the ETF prevents bias to any region or sector, allowing the fund to adopt a conservative allocation in uncertain periods, and move tactically into higher-risk opportunities as conditions warrant. It can also adapt its sensitivity to interest rates (duration) depending on the economic backdrop.

The fund is managed by an investment team led by Global CIO and portfolio manager Bob Michele, who has been managing global fixed income for over 35 years. JP Morgan’s $470 billion fixed income platform leverages the expertise of 200+ sector specialists, who can provide a real-time view on opportunities around the world, generating research based on fundamental, quantitative, & technical analysis.

“JP Morgan is uniquely positioned to offer an ETF that provides access to some of the most sophisticated fixed income investment capabilities available to investors,” said Robert Deutsch, US Head of ETFs for JP Morgan Asset Management. “Our network of global experts and research analysts can scour the globe for opportunities in any market cycle, and their extensive experience with this type of investing is unrivalled.”

“Investors look to JP Morgan for our best ideas, beyond traditional investing, as they continue to search for additional yield in tough markets,” added Andrea Lisher, Head of North America, Global Funds for JP Morgan Asset Management. “Delivering this through both mutual funds and ETFs demonstrates our commitment to meeting our clients’ needs and helping them build stronger portfolios.”

While the fund is unconstrained in its investment processes, its prospectus sheds some light on the strategy of the ETF under ‘normal circumstances’. It states it will invest at least 40% of assets in countries other than the US, including developed and emerging markets. It will seek at least a 25% allocation to investment grade securities, although this may rise substantially at any point in time, and will aim to keep portfolio duration to 8 years or less. The fund permits a wide range of eligible securities to be held within its portfolio, including government, quasi-government, inflation-linked, corporate, mortgage- and asset-backed securities.

The ETF has a total expense ratio (TER) of 0.55% due to a contractual fee waiver in place until at least March 2020. The fund’s gross expense ratio is 1.05%.

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