Municipal securities in the underlying portfolio are primarily investment-grade rate and include variable rate demand obligations, variable rate demand preferred securities, short-term municipal notes, municipal bonds, tax exempt commercial paper, private activity and industrial development bonds, tax anticipation notes, bond anticipation notes, revenue anticipation notes or other short term notes, private placements and participation in pools of municipal securities.
The fund managers employ a value-driven, bottom-up approach and seeks to maintain a target duration range of two years or less. J.P. Morgan argued that the shorter duration can help to reduce volatility.
“Investors have become wary of fixed income investments in a rising rate environment,” Joanna Gallegos, U.S. Head of ETFs at J.P. Morgan Asset Management, said in a note. “JMST’s focus on low duration positions should help to mitigate interest rate risk, while potentially offering a higher yield than tax-exempt money market funds.”
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