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Travis Spence, JP Morgan Asset Management
Travis Spence, JP Morgan Asset Management

Active ETFs see strong demand at J.P. Morgan

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J.P. Morgan Asset Management | Best Active ETF Issuer ($100m+) | Best Emerging Markets Equity ETF Issuer ($100m-$1bn) | Best Global Equity ETF Issuer ($100m-$1bn) | Best European Equity ETF Issuer ($100m-$1bn) | Best US Equity ETF Issuer ($100m-$10bn)

Travis Spence, Head of EMEA ETF Distribution, J.P. Morgan Asset Management answers a Q&A interview on the firm’s wins in the awards.

Why do you think you won this award?

We have seen strong demand across our suite of active core equity ETFs. For example, our US Equity REI ETF (JREU) saw 9 per cent of inflows in 2022, and 15 per cent in January 2023, into the US Large Equity category. Our REI ETFs provide access to active management at an attractive price point.

We’re also honoured to have been awarded Best Active ETF Issuer ($100M+) which we believe reflects the sum of the overall demand for our active ETFs as well as new product launches, including the industry’s first active UK equity ETF as well as an innovative active thematic ETF.

What is the size and scale of your business at the moment?

Globally our ETF business has surpassed USD100 billion in assets under management (as of end of February 2023). In UCITS, we are currently the largest and most diversified active ETF provider and experienced more than 100 per cent of active ETF flows during 2022. Since 2018 we have launched 18 active ETFs and have continued to expand our active ETF offering. We have exciting plans in place for this year – particularly in the active ESG ETF space – as more investors seek out the benefits of combining ETFs and active management to help meet their sustainable investing needs.

What trends have you seen over the past year?

While 80 per cent of the UCITS ETF market is characterised by traditional passive ETFs, three segments have been growing rapidly: ESG, Thematic and Active ETFs, with five year CAGR of 54 per cent, 47 per cent and 19 per cent, respectively.

ESG ETFs made up 55 per cent of flows in the UCITS space in 2022. We see more investors realising the benefits of combining active with ESG strategies in the ETF wrapper. We currently have 17 actively managed ESG strategies that are powered by in-house research and company engagement, which is part of our DNA as a global asset manager specialising in active management.

Flows into active ETFs are also picking up globally. Year to date in the US, active ETFs accounted for 43 per cent of net flows, compared to 15 per cent in 2022. In UCITS, while active ETFs comprise only 1.5 per cent of total ETF assets, active comprised 3 per cent of net flows 2022.

In Europe, there is still more education needed around active ETFs when it comes to trading and transparency which is why we launched The ETF buyers’ guide to active ETFs.

Where do you see the ETF industry going in terms of products over the coming year?

We believe Europe will follow in the footsteps of the US market, with active ETFs continuing to gain more traction in the years ahead.

In a survey we conducted last December, 32 per cent of survey respondents said they will increase their allocation to active ETFs this year: 10 per cent said they plan to increase an existing allocation, while 22 per cent of the ETF buyers said they will start allocating to active ETFs for the first time.

Similar results have emerged from other industry surveys. We have also seen a steady stream of active ETFs listing in the UCITS market which, one might conclude, pre-empts this growing demand.

For those investors that like the transparency and flexibility of the ETF wrapper, but also want to achieve Alpha, we believe active ETFs will have an important role to play in the future growth and adoption of ETFs.

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