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J.P. Morgan Asset Management launches UCITS active global agg bond ETF: JAGG

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J.P. Morgan Asset Management (JPMAM) has launched JPMorgan Active Global Aggregate Bond UCITS ETF (ticker: JAGG), an active fixed income ETF, which offers diversified exposure to global fixed income using the firm’s global aggregate bond strategy. The strategy, which first launched in 2009, has over USD11 billion assets under management (as of 31 August 2023).

Benchmarked against Bloomberg Global Aggregate Index Total Return USD Unhedged, JAGG will offer ETF investors a core allocation covering a wide opportunity set spanning government, corporate, government-related, emerging market, and securitised bonds across 25 local currency markets. The size and complexity of the Global Aggregate universe makes a compelling case for active management.

Managed by Myles Bradshaw, Iain Stealey and Linda Raggi, and supported by a global research team with over 70 quantitative and fundamental research analysts, JAGG will employ bottom-up security selection and top-down sector allocation, while taking advantage of relative value opportunities by rotating between sectors, with the goal of outperforming JAGG’s respective benchmark over the long-term net of fees. The ETF is classified as Article 8 under EU SFDR regulation.

Active strategies are particularly well-suited to fixed income ETFs, the firm writes. Unlike equity indices, the composition of bond indices is driven by the largest issuers, not necessarily the most “successful” issuers. This means where a passive ETF will typically drift towards the largest issuers over time irrespective of the quality of their balance sheets, an actively managed fixed income ETF can allocate towards higher-quality issuers and away from those that could be at risk for downgrades, which can help preserve capital and returns in time of economic or market stress.

Commenting on the launch, Travis Spence, Head of EMEA ETF Distribution at J.P. Morgan Asset Management says: “Active fixed income ETFs can capitalise on numerous factors that impact bond prices and move markets, including economic and market cycles and central bank actions across both government and corporate securities. An active strategy can adjust interest rate exposure and sector allocation through the cycle, enabling investors to own cheaper securities and underweight expensive ones while maintaining a stable bond beta.

“Our Global Aggregate strategy’s time-tested process has delivered strong returns since inception in 2009 while retaining the key features of a core bond portfolio, including low volatility, limited drawdowns and no market bias. We’re delighted to be bringing this capability to the ETF wrapper as well as offering clients the industry’s first UCITS active global agg bond ETF,” says Spence.

JAGG has listed on the LSE, Deutsche Börse Xetra, SIX and Borsa Italiana and will have a Total Expense Ratio of 30 basis points. 

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