The muni bond ETF world shook this morning with news that J.P. Morgan Asset Management (JPMAM) has merged a key muni bond fund into an existing muni bond ETF. That makes the ETF the largest active muni bond ETF in the U.S., with $5.8 billion in AUM. The JPMorgan National Municipal Income Fund merged into the JPMorgan Municipal ETF (JMUB) as of this morning.
See more: Adding Municipal Bonds? Don’t Ignore Active ETFs
The move comes as more and more asset managers are fully embracing the ETF wrapper for fixed income offerings. Where historically many asset managers quickly adopted the ETF wrapper for new equity launches or for conversions, fixed income has moved a bit more slowly. The conversion of the firm’s existing JPMorgan National Municipal Income Fund represents yet another milestone for the ETF wrapper.
JMUB Emerges as Key Muni Bond ETF
JMUB charges an 18 basis point fee for its services. The strategy entails actively investing in investment-grade munis that aim to deliver tax-free income. Its managers look to balance credit risk and duration as well, in doing so. Together, that has helped the active muni bond ETF return 5.3% over the last three years.
The newly merged ETF doesn’t just emerge as the fourth largest active fixed income ETF, per JPMAM. The strategy also brings total U.S. ETF AUM to more than a quarter of a trillion dollars, the firm shared.
“This merger marks a significant step forward for our municipal bond investors and our ETF business,” said Travis Spence, global head of ETFs, J.P. Morgan Asset Management. “By combining the strengths of both funds, we’re able to offer clients a more efficient, transparent, and cost-effective way to access municipal markets.”
“Advisors are increasingly turning to ETFs to gain municipal bond exposure due to their efficiency and transparency,” said Todd Rosenbluth, VettaFi head of ETF research. “It is great to see JPMorgan leverage its in house resources to support the growth of active fixed income ETFs.”
Together, the new fund may intrigue investors looking to refresh their bond portfolios. For those wanting a new option, JPMAM’s newest conversion is hard to ignore.
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