JPMorgan already has 52 actively managed ETFs – now two new ones will be added that are preparing to offer investors attractive returns on capital even in difficult stock market times. What strategies do the fund managers want to use to achieve outperformance?
• JPMorgan has launched two new active ETFs with different strategies
• Active ETFs continued their boom
• Investors expect many advantages from active ETFs
Stubborn inflation, persistently high interest rates, economic slowdown, geopolitical risks – numerous stress factors are currently curbing investors’ desire to buy. An increasing number of investors are therefore trying to earn decent returns despite the difficult environment using actively managed ETFs (exchange-traded funds). Now JPMorgan is increasing its ambitions in this growing segment.
JPMorgan wants to attract customer money with these two active ETFs
On September 14th the time had come: JPMorgan launched two new, actively managed ETFs: the JPMorgan Global Select Equity ETF (JGLO) and the JPMorgan International Value ETF (JIVE). The two funds pursue different strategies. While the Global Select Equity ETF seeks to select particularly profitable, globally operating companies (including many US corporations) using a “stock picking” approach, the International Value ETF focuses on smaller companies in the emerging markets – no US corporations will be involved Find your way into this ETF. There is another difference between these two ETFs: the Global Select Equity ETF is managed by only one portfolio manager – Helge Skibeli – whereas the International Value ETF is managed by two money managers, Thomas Buckingham and Harold Yu.
Like all actively managed ETFs, JPMorgan’s Global Equity ETF and International Value ETF must compete against major benchmarks against which their relative performance will be measured. In the case of the Global Select Equity ETF, this is the MSCI World; for the International Value ETF, the JPMorgan International Value ETF (JIVE) serves as a direct comparison authority.
Active ETFs are booming
The US financial institution, which recently recorded a jump in profits thanks to rising interest rates, wants to attract even more investor money using these new active ETFs. At last count, JPMorgan managed about $120 billion in active ETFs. This goal corresponds to the spirit of the times, as actively managed ETFs are experiencing a veritable boom in the current stock market year. JPMorgan, the largest US bank and, according to “etf.com” information, the seventh largest issuer of ETFs, has also jumped on the bandwagon. JPMorgan recently converted several handfuls of investment funds into active ETFs as demand rose sharply.
“Regardless of the market environment, investors demand an active strategy that aims to take advantage of the attractive return opportunities without taking on undue risk,” said Helge Skibeli, the portfolio manager of the new Global Select Equity ETF, in a statement published by etf.com. quoted statement. The statistics prove Skibeli right: While the volume of passive ETFs has only increased by three percent so far this year, active ETFs recorded growth of 14 percent. At last count, there were 1,167 actively managed ETFs, which together managed assets of $448 billion.
What differentiates actively managed ETFs from passive ETFs and mutual funds?
Actively managed ETFs, which first appeared in 2008, must be distinguished from both common (active) mutual funds and passive ETFs. Compared to investment funds, which, unlike ETFs, cannot usually be traded directly on the stock exchange, investors expect improved trading flexibility, increased transparency and lower fees from active ETFs.
At the same time, active ETFs should bring a higher return than passive ETFs, especially in difficult stock market times, because behind the active ETFs – as the name implies – there are portfolio managers who use different approaches to try to outperform the broad market or individual regions, countries and asset classes or sectors to reach. However, it is a hotly debated question in academic circles whether active money managers can even succeed in outperforming the market in the long term.
The success of JPMorgan’s two new ETFs will be closely monitored by analysts and economists to determine whether they actually provide investors with an attractive excess return. As is well known, the most famous active ETF in the world, Cathie Wood’s ARK Innovation ETF, has not achieved this feat in recent years.
Editorial team finanzen.net
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