JP Morgan Asset Management (JPMAM) has launched three actively-managed corporate bond research enhanced index ETFs and a fourth active equity research enhanced index ETF.
The following ETFs are now available on the London Stock Exchange (LSE), Deutsche Boerse Xetra and Borsa Italiana:
- EUR Corporate Bond Research Enhanced Index Ucits ETF [JREB]
- EUR Corporate Bond 1-5yr Research Enhanced Index Ucits ETF [JR15]
- USD Corporate Bond Research Enhanced Index Ucits ETF [JRUB]
- Global Emerging Markets Research Enhanced Index Equity (ESG) Ucits ETF [JREM]
JREB, JR15 and JRUB offer an alternative to passive corporate bond market investing. Passive bond ETFs tend to replicate index weights which are determined by the amount of debt outstanding. As a result, passive investing tends to force investors to own the most indebted and most leveraged of issuers without taking into consideration whether these bonds are compensating investors for the amount of credit risk they are taking.
JPMAM's actively-managed corporate bond ETFs will instead focus on identifying the most attractive opportunities on a risk adjusted basis so that investors are not unnecessarily exposed to uncompensated risks inherent in passive investing. This investment process is grounded in proprietary credit research which produces sector and security rankings, based on fundamental research and relative value views.
The investment grade (IG) credit portfolio management team is supported by 20 dedicated credit research analysts, with over 15 years of average experience, and headed up by Lisa Coleman who has over 30 years' experience in the IG market. Coleman currently manages over $50bn of ESG-integrated investment grade portfolios. The corporate REI investment process is also supported by 9 quant research analysts from the Quantitative Research Group within JPMAM's fixed income business, co-headed by Frederick Bourgoin and Bhupinder Bahra.
The investment teams will apply JPMAM's proprietary credit research to identify the issuers that are attractive on a risk-adjusted basis and take overweight positions in names the credit research analysts find attractive and underweight positions in the names they don't. As a result, the portfolios will maintain index-like characteristics while seeking incremental positive excess returns, compounded over time.
JREB will be benchmarked against the Bloomberg Barclays Euro Aggregate Corporate Index (Total Return) Index. JR15 will be benchmarked against the Bloomberg Barclays Euro Aggregate Corporate 1-5 Index (Total Return) Index and JRUB will be benchmarked against the Bloomberg Barclays US Corporate Investment Grade Index (Total Return) Unhedged Index. All three ETFs will have a Total Expense Ratio (TER) of 19 basis points.