J.P. Morgan Asset Management has rolled out a speculative-grade bond exchange traded fund, its first fixed-income related strategy and its second actively managed offering.
J.P. Morgan launched the JPMorgan Disciplined High Yield (BATS: JPHY) on Thursday. JPHY has a 0.40% expense ratio.
The new active high-yield bond ETF tries to generate higher risk-adjusted returns and lower credit risk relative to existing passive options.
Interest rates are hovering near historical low levels, but investors can still generate some extra cash through high-yield investments with lower rate sensitivity and diminished correlations to the potential risk in U.S. Treasuries.
SEE MORE: Waiting for Junk Bond ETFs to Breakout
While some may be skeptical of the potential credit risks in the corporate debt market, JPHY provides high yield exposure that excludes securities exhibiting what what may be considered unattractive risk-reward profiles.
[related_stories]“Fixed income is an important component of an investor’s diversification strategy and JPHY makes the high yield segment of the market more accessible, in a cost-effective manner.” Robert Deutsch, Global Head of ETFs for J.P. Morgan Asset Management, said in a press release. “Additionally, corporate high yield bonds tend to outperform during periods of rising rates and economic growth, which has been a concern for our clients given the challenging market conditions.”
JPHY will be actively managed by J.P. Morgan Investment Management team, including William J. Morgan, James P. Shanahan, Bhupinder Bahra, Frederick Bourgoin and Alexander Sammarco.
The advisors will utilize a multi-factor security selection process that uses factors the J.P. Morgan team believes reflect liquidity and issuer quality.
The fund may include debt obligations structured as bonds and other debt securities issued by corporate and non-corporate issuers, private placements, other unregistered securities, convertible securities, debt and convertible securities of Real Estate Investment Trusts (REITs), preferred stock, variable and floating rate instruments, and zero coupon, pay-in-kind and deferred payment securities. The portfolio may include both domestic or foreign debt securities, but holdings will only be invested in U.S. dollar-denominated assets.
SEE MORE: J.P. Morgan Rolls Out Its First Active ETF Strategy
This will be J.P. Morgan’s second actively managed ETF. The fund company previously launched the JPMorgan Diversified Alternatives ETF (NYSEArca: JPHF) earlier this week.
For more information on new fund products, visit our new ETFs category.