J.P. Morgan Chase (NYSE: JPM), the Wall Street banking giant, continues expanding its lineup of exchange traded funds, this time with an eye toward international markets with the introduction of the JPMorgan Diversified Return International Equity ETF (NYSEArca: JPIN).
Like its predecessor, the JPMorgan Diversified Return Global Equity ETF (NYSEArca: JPGE), JPIN tracks a FTSE Group index. The new ETF tracks the FTSE Developed ex North America Diversified Factor Index. [A Look J.P. Morgan’s New ETF]
“JPIN, like its predecessor JPGE, is designed to provide investors the opportunity to seek enhanced risk-adjusted returns through an ETF, and to help financial advisors keep clients invested in equities over the long term,” said J.P. Morgan in a statement.
On the upcoming webcast, Beyond Market Cap Investing: Strategic Beta ETFs, J.P. Morgan Asset Management’s Dr. David Kelly, Chief Global Strategist and Head of Global Market Insights Strategy Team, Robert Deutsch, Managing Director and Global Head of ETFs, Nigel Emmett, Managing Director and Senior Client Portfolio Manager for Global Equities Team, and Timothy Devlin, Executive Director and Client Portfolio Manager on Global Equities Team, help describe the investment environment for the international market and point to strategic-beta index-based strategies to best capture returns.
JPIN, which like JPGE fits the bill as a smart beta ETF, is managed by portfolio managers Ido Eisenberg, Demetris Georghiou and James Cook.
The FTSE Developed ex North America Diversified Factor Index is a multi-factor index that includes monthly rebalancing, liquidity screens, and turnover constraints, according to J.P. Morgan.
No holding accounts for more than 0.98% of JPIN’s weight and the ETF’s 335 holdings include some of largest companies based outside the U.S. JPIN’s top-10 holdings include Royal Dutch Shell (NYSE: RDS-A), BP (NYSE: BP), Samsung, GlaxoSmithKline (NYSE: GSK), British American Tobacco (NYSE: BATS), BHP Billiton (NYSE: BHP), AstraZeneca (NYSE: AZN) and Vodafone (NasdaqGS: VOD).
Those holdings, which are spread across 40 regional sectors, indicate JPIN’s approach to strategic beta offers exposure to the quality and value factors.
“The value factor was one of the first isolated in the original Fama and French asset pricing model, which corroborated the previously observed strong and positive relationship between low price-to-book stocks and returns. The authors argue that this value effect stems from the stocks’ capture of cross-sectional variation in returns that is related to relative distress,” according to a paper published in September on strategic beta advantages written by J.P. Morgan Asset Management’s Head of ETF Strategy and Business Development Ogden Hammond.
JPIN comes to market in the midst of a strategic beta boom. As of late August, assets under managements across smart beta ETFs totaled $350 billion, a 30% year-over-year increase. Much of that growth has been driven by institutional investors, including large money managers, endowments and pensions. [Institutions Flock to Smart Beta ETFs]
“Assets flowing into strategic beta ETFs have exploded in recent years, and the growth shows no sign of abating. Out of the approximately $1.7 trillion of assets in all exchange-traded products (ETPs),there were 342 strategic beta ETFs, with collective assets under management of about $291 billion, or 18% of that total,” Hammond’s paper noted, citing Morningstar data.
Financial advisors who are interested in learning more about strategic-beta or smart-beta ETFs can register for the Tuesday, November 11 webcast here.
JPIN Top Holdings
Table Courtesy: J.P. Morgan