J.P. Morgan Asset Management has unveiled two new currency-hedged exchange traded fund adaptations of its Diversified Return Europe and International Equity offerings.
The JPMorgan Diversified Return Europe Currency Hedged Equity ETF (NYSEArca: JPEH) and JPMorgan Diversified Return International Currency Hedged Equity (NYSEArca: JPIH) began trading Monday, April 4, according to a press release. Both JPEH and JPIH have a 0.49% net expense ratio.
The two new strategic- or smart-beta ETFs track customized indices that try to take a risk-managed approach to investing that could help investors ride the upside while diminishing drawdowns in a falling market.
The underlying indices diversify risks that are less likely to be rewarded while overweighting areas that are more likely to be rewarded. Specifically, JPEH’s the underlying index utilizes a top-down approach in risk allocation to equally distribute the portfolio’s risk across 10 sectors, and JPIH equally distributes its portfolio risk across 40 regional sectors. The two funds include a bottom-up four-factor ranking process, which screens and ranks components by value, size, momentum and low volatility factors. The alternative indexing methodology can provide lower risk access to equities than cap-weighted indices and add further diversification benefits.