JP Morgan AM expands its range of active income ETFs with two new products
6 NOV, 2024
By Jose Luis Palmer from RankiaPro Europe
J.P. Morgan AM announced today the expansion of its active management Equity Premium Income ETF offering in UCITs version, with the start of trading on the London Stock Exchange of two new funds: the JPMorgan US Equity Premium Income Active UCITS ETF (ticker: JEPI) and the JPMorgan Nasdaq Equity Premium Income Active UCITS ETF (ticker: JEPQ).
Both active management ETF strategies are preceded by the strong demand they have experienced from US investors since the launch of the US-domiciled versions of both ETFs, JEPI (launched in May 2020) and JEPQ (launched in May 2022) J.P. Morgan continues to lead the development of innovative ETF strategies. Specifically, as of October 24, the JPMorgan US Equity Premium Income Active (JEPI) is the largest active management ETF in the world, with $36.6 billion in assets under management; and the JPMorgan Nasdaq Equity Premium Income Active (JPEQ), with $17.6 billion under management, is one of the fastest growing active management ETFs in the United States.
The JPMAM Equity income premium UCITS ETF range now has three ETFs: the JPMorgan Global Equity Premium Income Active UCITS ETF (JEPG), launched in December 2023, and the two newly listed in Europe: JEPI and JEPQ. Each ETF aims to offer investors consistent monthly income and potential for equity market appreciation, with lower volatility, combining active equity portfolios with options.
Investment Strategy
Both the Global Equity Premium Income Active and the US Equity Premium Income Active leverage a fundamental bottom-up analysis process to build higher quality, lower beta equity portfolios relative to their respective benchmark indices, the MSCI World, in the case of the former, and the S&P 500, in the case of the latter. Meanwhile, the Nasdaq Equity Premium Income Active (JEPQ) uses a proprietary process based on over 40 years of experience and proprietary data accumulated by J.P. Morgan, to build a portfolio fundamentally linked to the Nasdaq 100.
Next, each ETF applies an index options strategy in which the investment team, led by Hamilton Reiner, sells options on the index each week, using the premiums to generate income. The premiums received from the sales of these options are paid monthly, in addition to the dividends received from the underlying equity included in each ETF.
The result is a range of ETFs from Equity Premium Income, designed to reduce downside exposure by giving up some future bullish participation in the markets in exchange for income at present. By selling options weekly, the ETFs can adapt to changing market conditions. For example, when volatility increases, each ETF has the potential to provide higher income, offering investors protection against price fluctuation.
Managed by Hamilton Reiner, Raffaele Zingone, Matt Bensen, and Judy Jansen, JEPI has an expected return of 7-9% annualized; JEPQ, managed by Hamilton Reiner, Eric Moreau, Andrew Stern, Matt Bensen, and Judy Jansen has an expected return of 9-11% annualized. On the other hand, JEPG, managed by Hamilton Reiner, Piera Elisa, Nicholas Farserotu, Matt Bensen, and Judy Jansen will continue to have an expected return of 7-9% annualized. Returns are not guaranteed and can change over time. All three ETFs will have a total expense ratio (TER) of 35 basis points.
JEPI and JEPQ, which offer investors access to the distribution class of the strategy, are also listed on XETRA and SIX from today. On the other hand, JEIA and JEQA, which offer investors access to the accumulation class of the strategy, are listed on the London Stock Exchange, XETRA, Borsa Italiana, and SIX.
We are delighted to expand our Equity Premium Income UCITS range with the launch of JEPI and JEPQ. These innovative and market-leading strategies, which have had strong demand in the US, offer investors an attractive solution to achieve their income and total return goals with reduced volatility. Over the past five years, we have worked closely with investors to build stronger portfolios with Equity Income Premium strategies, and we are pleased to now share this experience and unique solutions with our clients who require these vehicles in UCITS version.
Travis Spence, global director of ETFs at J.P. Morgan AM
