J.P. Morgan Makes Actively Managed ETFs From Mutual Funds

Posted on 08/02/2023

Mutual funds are widely held due to retirement plan saving, but index investing with low-fee ETFs has taken a bite out of mutual fund market share. It is estimated that mutual funds have assets of US$ 22 trillion while ETFs are closer to US$ 7 trillion. Even so, beating the market is challenging, and it simplifies the process to have a passive index, not to mention the resulting reduction in cost. Now J.P. Morgan Asset Management has decided to convert four of its mutual funds to ETFs. However, these ETFs will be actively managed, merging the two fund types. J.P. Morgan says “The conversion of these funds to actively managed ETFs will provide investors with active investment options in markets traditionally available to ETF investors through mostly passive solutions.”

Why make the conversion? J.P. Morgan says “The following four ETF conversions means shareholders will benefit from intraday trading, liquidity and reduced fees and may benefit from greater tax efficiency.” These funds are JPMorgan Equity Focus ETF, JPMorgan Limited Duration Bond ETF, JPMorgan High Yield Municipal ETF, and JPMorgan Sustainable Municipal Income ETF.

J.P. Morgan’s Bryon Lake points to the advantages ETFs have over mutual funds, which are generally not actively traded: “Investors are looking for differentiated active capabilities in the ETF wrapper. As conversions, these ETFs have a track record and scale from Day 1 and add to our active range of ETF providing tools for investors to meet their investment goals. We are excited to provide shareholders with greater choice and access to the benefits that active ETFs can provide, including additional trading flexibility, increased transparency and reduced fees through transparency at attractive price points.”

The four funds have assets of US$ 1.5 billion. J.P. Morgan Asset Management has US$ 2.67 trillion. J.P. Morgan clients run the spectrum from retail investors to institutional investors.

J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co., and its affiliates worldwide.

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