J.P. Morgan Asset Management continued its aggressive push into the exchange-traded fund space with today’s launch of two actively managed transparent equity ETFs.
The JPMorgan Equity Premium Income ETF (JEPI) seeks to generate current income and participate in capital appreciation by investing in stocks—mainly from the S&P 500 index—and in equity-linked notes, or ELNs. ELNs are derivative instruments that combine the economic characteristics of the S&P 500 and written call options in a single note, and they’re designed to provide recurring cash flow by collecting premiums from the call options.
As described in the fund’s prospectus, the ELNs could reduce the fund’s volatility by generating income that would reduce the losses incurred in its equity portfolio. On the flip side, the ELNs could limit the fund’s ability to fully participate in upside equity markets.
The fund seeks annualized income distributed monthly from both stock dividends and options premiums. Its net expense ratio is 0.35%.
The JPMorgan International Growth ETF (JIG) takes a fundamental bottom-up approach by a team of global sector specialists to find international companies in both developed and emerging markets that fund managers believe have strong growth and quality characteristics.
As of yesterday, the fund contained 57 stocks. The five largest positions were Alibaba Group Holding, Nestle, Tencent Holdings, Roche Holding and Taiwan Semiconductor, and their portfolio weights ranged from 4.5% to 3.47%.
The fund’s net expense ratio is 0.55%.
J.P. Morgan Asset Management introduced its first ETFs in 2014, and has quickly climbed the charts to become the 10th-largest provider of U.S.-listed ETFs with 36 products and total assets under management of $27.5 billion.