J.P. Morgan Asset Management plans its first foray into the European exchange traded fund space with an actively managed offering. Meanwhile, in the U.S., a smart-beta index-based ETF will likely come first.
The asset manager plans to roll out a range of active, Europe-listed ETFs as early as the fourth quarter, depending on regulatory approval, reports Judith Evans for Financial Times.
“Our long-term focus is on the active ETF opportunity,” a spokesperson for J.P. Morgan Asset Management said in the article. “We will be bringing this capability to Europe as part of a global offering.”
In the U.S., the firm is testing the waters with a so-called smart-beta global equity ETF that passively tracks an alternative index methodology. The ETF is set to launch in the first half of 2014. [JPMorgan Plans to Enter the ETF Arena, Looks to Active Space]
Other mutual fund providers and smaller asset managers have been slow to enter the active ETF space, waiting to see if others make or break it in the market.
“Active ETFs can be difficult to manage so a lot of active managers will think twice before doing this – it takes a group like JPMorgan, which has the resources to follow it through,” Ben Seager-Scott, senior research analyst at BestInvest, told the FT. “No one wants to flop a launch. Other groups will be watching with interest – if it takes off, perhaps they will be looking to bring their offerings over.”
Diana Mackay, chief executive of research firm Mackay Williams, believes active ETFs in Europe are an “extremely interesting move” but it will take time. Consequently, Mackay argues that the active ETFs will first gain traction among institutions before retail investors start picking them up.
According to ETFGI data, active ETFs have $20 billion in assets globally, with $16.1 billion in fixed-income, $2.6 in equities and the rest in currency products. PIMCO manages the four largest active ETFs, and of those, the third and fourth largest are UCITs-compliant funds registered in Europe. [Understanding Synthetic ETFs, UCITs and Counterparty Risks]
For more information on active ETFs, visit our actively managed ETFs category.
Max Chen contributed to this article.