JP Morgan lists first European-domiciled ETFs on LSE

Nov 14th, 2017 | By | Category: ETF and Index News

JP Morgan Asset Management (JPMAM) has listed two ETFs on the London Stock Exchange (LSE) – the JPMorgan Equity Long-Short UCITS ETF (JELS LN) and the JPMorgan Managed Futures UCITS ETF (JPMF LN) – marking the firm’s entrance into the European ETF provider space.

JP Morgan lists first European-domiciled ETFs on the LSE

The new ETFs seek to make hedge fund strategies available to all investors through the low cost and transparent vehicle of an ETF.

Both ETFs are actively managed and aim to provide returns similar to hedge fund strategies by using advanced factor-based investing techniques. Both strategies use a systematic, rules-based investment approach, with the goal of providing returns that are uncorrelated to traditional asset classes in a liquid, cost-effective and transparent vehicle.

Massimo Greco, head of European Funds at JPMAM, commented: “Having pioneered alternative beta investing in UCITS nearly a decade ago, we’re now the first provider in Europe to introduce systematic, bottom-up capture of hedge fund styles into an ETF.”

JELS provides exposure to developed equity market factors, such as value, quality and momentum. The portfolio will be constructed bottom-up by taking long and short position in individual equity securities. The ETF has a return target of cash +4% (gross of fees), a risk target of 6-8% per annum, an expected beta of up to +0.3, and a total expense ratio (TER) of 0.67%.

JPMF offers exposure to the carry and momentum factors across equities, fixed income, currencies and commodities. The strategy will be constructed bottom-up by taking long and short positions in futures markets. The ETF has a return target of cash +4% (gross of fees), a risk target of 6-8% per annum and a TER of 0.57%.

The ETFs are set to be rolled out across other major European exchanges shortly.

Bryon Lake, international head of ETFs at JPMAM, commented: “The increasing availability of lower cost, more liquid and transparent forms of alternative investing has gradually been democratising hedge fund investing for the last several years. Both strategies offer innovative building blocks intended to help investors build stronger portfolios and reduce a portfolio’s overall volatility without sacrificing return potential.”

Both ETFs were designed by JPMAM’s Quantitative Beta Strategies team, a team of quantitative research analysts and portfolio managers dedicated to factor-based investing across strategic beta (long-only) and alternative beta (long-short) strategies.

JP MAM’s US-based ETF suite currently features thirteen product offerings with approximately $2.2 billion in assets under management.

Investors looking for exposure to a broad range of hedge fund strategies through a single ETF ticker may wish to consider the UBS HFRX Global Hedge Fund Index UCITS ETF (HFUSAS SW). The ETF tracks the HFRX Global Hedge Fund Index, which is designed to be representative of the overall composition of the hedge fund universe. Harnessing the Hedge Fund Research (HFR) database, the index is composed of all eligible hedge fund strategies, including, but not limited to: convertible arbitrage, distressed securities, equity hedge, equity market neutral, event driven, macro, merger arbitrage, and relative value arbitrage. The strategies are asset weighted based on the distribution of assets in the hedge fund industry. The fund’s TER is 0.34%.

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