JP Morgan Asset Management (JPMAM) has launched four fixed income ETFs: the JPMorgan ETFs (Ireland) ICAV – GBP Ultra Short Income UCITS ETF (JGST); JPMorgan ETFs (Ireland) ICAV – EUR Ultra Short Income UCITS ETF (JEST); JPMorgan ETFs (Ireland) ICAV – BetaBuilders UK Gilts 1-5yr UCITS ETF (JG15) and the JPMorgan ETFs (Ireland) ICAV – BetaBuilders US Treasury Bond 1-3yr UCITS ETF (JU13).
The last two have also listed on the Deutsche Boerse Xetra and Borsa Italiana today. Both these ETFs will list on the SIX Swiss Exchange on 10 July 2018.
“We are very pleased to be offering clients access to our industry-leading liquidity capabilities through the benefit rich ETF wrapper. We see particular opportunities for growth and adoption of fixed income strategies within ETFs which is why we’re heavily investing in this space,” says Bryon Lake, Head of International ETFs at JP Morgan Asset Management.
Having previously launched (JPST) JPM USD Ultra Short Income UCITS ETF, JPMAM is now making this available in more currencies. The strategies are run by JPMAM’s Global Liquidity’s Managed Reserves team.
“For clients that don’t need the same level of liquidity, ultra-short solutions can provide an incremental return over AAA rated liquidity funds, in a low risk framework” says Neil Hutchison, lead portfolio manager for Managed Reserves portfolios in Europe.
“Following discussions with asset allocators across Europe two trends have come to our attention with respect to how they’re seeking to incorporate our ultra-short suite into client portfolios. Asset allocators are finding that, firstly, for only a few months more duration they can increase their yield by 45 per cent. Secondly, they’ve found they can capture 82 per cent of the US Aggregate Bond Index yield with only 8 per cent of the duration. In a rising rates environment, employing strategies such as these can help with monitoring and controlling duration,” says Lake.
Both (JGST) JPM GBP Ultra-Short Income UCITS ETF and (JEST) JPM EUR Ultra-Short Income UCITS ETF will seek to provide diversified exposure to very short maturity bonds and debt instruments across investment-grade corporate bonds and government debt.
The strategies will take a conservative approach in order to mitigate volatility and limit duration exposure, by leveraging JP Morgan’s Global Liquidity expertise to target portfolio duration of less than one year. The Ultra-Short Income ETFs will have a return target of 0.20-0.40 per cent [net of fees] over Money Market Funds and a total expense ratio (TER) of up to 22 basis points, waived to 18 basis points until 28 February 2021.
JPMAM is also building out its BetaBuilder range, consisting of ‘building block’ ETFs, which offer precise exposure to strategically important areas of the market. Having previously launched (JE13) JPM BetaBuilders Eur Govt Bond 1-3yr UCITS ETF, investors will now also be able to access UK Government Bonds and US Treasury Bond indices.
(JG15) JPM BetaBuilders UK Gilts Govt Bond 1-5yr UCITS ETF aims to track the JP Morgan Government Bond Index United Kingdom 1-5 Year and (JU13) JPM BetaBuilders US Treasury Bond 1-3yr UCITS ETF aims to track the JP Morgan Government Bond Index United States 1-3 Year.
The BetaBuilder ETFs will be managed by JPMAM’s Quantitative Beta Strategies (QBS) team and have a Total Expense Ratio of up to 10 basis points.
