JP Morgan makes ETF debut on SIX Swiss Exchange

Apr 18th, 2018 | By | Category: ETF and Index News

JP Morgan Asset Management has made its ETF debut in Switzerland with the cross-listings of four products on Zurich’s SIX Swiss Exchange. The new offerings bring the total number of ETF providers with funds on the exchange to 24, with a total of 1,352 ETFs.

Bryon Lake, international head of ETFs, JP Morgan Asset Management.

Bryon Lake, international head of ETFs, JP Morgan Asset Management.

The new listings are split between two active ETFs and two passive ETFs.

In the active camp are the JPM Managed Futures UCITS ETF (JPMF SW) and the JPM Equity Long-Short UCITS ETF (JELS SW).

The two passive listings are the JP Morgan USD Emerging Markets Sovereign Bond UCITS ETF (JPMB SW) and JP Morgan BetaBuilders Eur Govt Bond 1-3yr UCITS ETF (JE13 SW).

The two active ETFs, JPMF and JELS, are the first to listed on SIX Swiss Exchange in two years—they were also JP Morgan’s first ETFs ever to list in Europe, debuting in November 2017.

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

JELS provides exposure to developed equity market factors, such as value, quality and momentum. The portfolio is constructed bottom-up by taking long and short positions in individual equity securities. The ETF trades in dollars, 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 TER of 0.67%.

As for the passive funds, JPMB tracks the JPM Emerging Market Risk-Aware Bond Index, which was created by the firm’s Quantitative Beta Strategies team and derived from the flagship JP Morgan EMBI Global Diversified Index. The fund provides smart beta exposure to US dollar-denominated sovereign debt across emerging markets.

The index uses a rules-based filtering and alternative risk weighting three-step process. The first step seeks to achieve a more liquid subset of the starting universe by filtering out instruments with smaller face amounts outstanding and those that are closer to maturity. The second step seeks to limit country-specific risk by removing those countries with the highest spread risk. Finally, the third step seeks to reallocate the remaining countries to target a stable allocation of spread risk from its investment grade and high yield sub-components.

JPMB has a TER of 0.39% and trades in dollars.

JE13, also designed by JP Morgan’s Quantitative Beta Strategies team, tracks the JP Morgan EMU Government Bond 1-3 Year Index. The index provides exposure to euro-denominated bonds of between one- and three-year maturities that have been issued by governments of Eurozone countries. It only includes liquid, bullet, fixed-rate coupon instruments and maintains an investment-grade composite credit rating of A+.

JE13 has a TER of 0.10% and trades in euros.

Bryon Lake, head of international ETFs at JP Morgan commented, “In developing our ETF business, we are seeking to make JP Morgan Asset Management’s acknowledged, long-established expertise available in the ETF domain. When talking to investors, we found that there was demand for active, smart fixed-income solutions, as well as for strategies with low correlation to the broader market that can help equip portfolios to cope with rising volatility.”

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