JP Morgan Asset Management it was recently launched to the business of quoted funds (in the year 2014 in the United States and in 2017 in Spain). However, this segment has become one of its main bets. Bryon Lake tells us, responsible for the international business of JP Morgan ETFs outside the United States.
JP Morgan opened its European business of ETFs in March of last year to take advantage of the rapid growth of the market, what balance do they carry out in this first year? How is the business going global? What are the updated figures?
European business is developing at a good pace in terms of product launches and, in order to complement the range, socially responsible equities ETFs will be launched in the coming weeks. Worldwide, we already have 40 ETFs and 12,000 million dollars under management, which represents a very important growth. This clearly demonstrates that our decision to launch ETFs of passive management, strategic beta and active management is the right approach for clients both in the United States and in Europe. JP Morgan AM has developed a very successful active management business over the years and we wanted to complement it to guarantee customers comprehensive solutions for their investment needs. Contrary to popular belief, listed funds are just a vehicle to make the investment accessible to customers. The content of these vehicles can be very diverse: from passive to active investment or strategic beta.
What is the situation of the ETFs business in the Spanish market? What management volume do you have in Spain with this business?
Like most European markets, the ETF business in Spain is driven by institutional clients. We are developing new collaborations with our customer base to increase our presence and meet the needs of local customers. More specifically, Spain is a "conservative" market and appetite is favored by short-term product types. This is where we believe that our money market ETFs and fixed rent of short duration complement our range of funds well.
Which of the ETFs registered in Spain is performing better? Which is more successful among the clients?
Our products were launched in November 2017 and are in full development. Money market ETFs, JPST / JEST, are attracting the interest of investors. In terms of duration, these products are located between the money market and short-term fixed income, which may have a maximum duration of one year and generate a very competitive yield taking into account the current environment of interest rates.
Do you plan to launch new ETFs in Spain in the short term?
We have a very ambitious launch calendar. In fact, in the course of the next few months, we intend to launch several until we have around 20 ETFs towards the end of this year. All will be available for Spanish investors. We will also have products with coverage in euros.
The offer of JP Morgan ETFs is not composed of classic exchange-traded funds with passive investment strategies (funds that generate beta). What is your product strategy with respect to this?
Our goal is to offer a wide variety of investment solutions to our customer base: passive ETFs, strategic beta and active ETFs, to offer them exposure to fixed income and equities. Our goal is to continue building a business of ETFs, which combine the best of technology and the management teams of JP Morgan Asset Management.
Is the price one of the advantages of ETFs, what is your strategy with respect to commissions?
We are very aware of this and we are developing a range of ETFs taking into account the average market prices. For passive ETFs, we are in a highly competitive range (around 10 basis points for fixed-income products in euros or American bonds, for example); and in the active management segment we are 3 times cheaper than the normal active management funds (57 basis points for long-short equity strategies without success commission). In order to provide the best offer to our customers, we wanted to be competitive in price, closely monitoring our spreads. We are aware that we must take the price into account when developing our range of ETFs.
It is said that ETFs are very useful to combat inflation and protect against the risk of rate hikes. Why?
The ETF is only a vehicle and can integrate virtually any type of management. Depending on the market situation, customers have instruments available to change from one type of exposure to another. To fight inflation and protect against rising interest rates, customers have access to money market and fixed income products. At JP Morgan we have developed a series of ETFs to offer solutions of this type.