Investors can use active management to adapt their portfolios to adjust to the current investment environment, according to JPMorgan Asset Management’s global head of ETF solutions, Byron Lake.
Speaking with Jill Malandrino on Nasdaq TradeTalks at Exchange: An ETF Experience, Lake explained how active management could help navigate market volatility and the Federal Reserve’s impending rate hikes.
“There’s a lot of uncertainty in the market that people are trying to adjust their portfolios for,” said Lake. “And with an actively managed strategy, [investors] can intentionally adapt their portfolio to deal with the environment that they’re investing in.”
Lake elaborated: “So, if they want to pull in their duration because they’re an active fixed income manager, they can do that. If they want to be more selective about the credit risk they’re going to take on, they can do that. They don’t just have to follow whatever the index is doing, so that differentiates them massively. And they’re able to address the portfolio in different ways.”
The JPMAM executive added that active strategies “are providing a tremendous amount of value for investors,” and while “it’s not going to be easy to invest in this environment,” active can provide investors with “the tools to run appropriate portfolios that give them an opportunity to succeed.”
Lake also expressed his belief that the debate between active versus passive “was hogwash.”
“That was always a misplaced argument,” he said. “You need both.”
Lake noted that JPMorgan Asset Management converted its actively managed JPMorgan Inflation Managed Bond Fund (JIMAX) into the JPMorgan Inflation Managed Bond ETF (JCPI) over the weekend. The conversion of the $1.1 billion mutual fund is part of JPMAM’s plan to switch four mutual funds into ETFs this year.
Other large actively managed fixed income ETFs in JPMorgan’s fund line-up include the JPMorgan Ultra-Short Income ETF (JPST) and the JPMorgan Disciplined High Yield ETF (JPHY).
“JPMorgan has already established a strong active ETF presence, but the manager’s commitment to be a leading provider is enhanced as they convert long-standing products into ETFs,” said ETF Trends’ head of research, Todd Rosenbluth.
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