J.P. Morgan Chase (NYSE: JPM), the venerable Wall Street bank, and Global X, the exchange traded funds issuer known for its lineup of unique income and international funds, are partnering on two new tactical ETFs due out Thursday.
The Global X/JPMorgan U.S. Sector Rotator Index ETF and the Global X/JPMorgan Efficient Index ETF are expected to list on the New York Stock Exchange with objective of competing with the rapidly growing managed ETF portfolios industry.
A managed ETF portfolio is one that invests at least half of the assets in ETFs. The overall popularity of ETF managed portfolios is attributed to the growth in the ETF business, but investors are increasingly interested in an alternative strategy that has a traditional core. [The Rise of ETF Managed Portfolios]
“The Global X/JPMorgan US Sector Rotator Index ETF itself will hold other sector stock ETFs. Monthly buy and sell signals are determined by an index devised by J.P. Morgan,” reports Chris Dieterich for the Wall Street Journal.
The other ETF the firms are partnering on, the Global X/JPMorgan Efficient Index ETF, will track a J.P. Morgan index “that regularly shifts ETF holdings based on market momentum and volatility signals. It can allocate between holdings across assets including global stocks, bonds, commodities and real estate,” according to the Journal.
Advisory firms manage all-ETF portfolios for some investors, but the catch is relatively high account minimums. As more individual investors show interest in ETFs, the higher account minimums are not suitable. In turn, some of the larger advisory firms are lowering account minimums to help target a bigger investor pool. The two Global X/JP Morgan ETFs, though somewhat pricey by ETF standards, give investors a cost-effective avenue for accessing ETF managed portfolio strategies. [A Look at ETF Managed Portfolios]
“At the end of the second quarter, strategies in Morningstar’s database had collective assets under management (AUM) or assets under advisement (AUA) of $102 billion,” according to Morningstar.
Like the ETF business at large, the manage portfolios landscape is dominated by three players – F-Squared Investments, Good Harbor Financial and Charles Schwab’s (NYSE: SCHW) Windhaven Investment Management.
Global X has nearly $3.8 billion in assets under management. J.P. Morgan launched its first ETF earlier this year, the JPMorgan Diversified Return Global Equity ETF (NYSEArca: JPGE).
ETF Trends editorial team contributed to this post.