JP Morgan Asset Management is targeting “significant growth” for its active ETF business in the coming years.
JP Morgan's ETF business outside of the US has assets of £20bn, with £17bn of that in actively managed ETFs, which is the area the firm are focused on growing from here.
But rather than try to build the unit via the launch of thematic products, the focus is on creating ETF structures for their existing fund managers to run alongside the existing products, rather than create new investment strategies, according to Ted Malcolm, the firm’s head of UK ETF distribution.
Globally, around 20 per cent of all flows into ETFs last year were from clients wanting active products, though the latter continue to represent only a small proportion of the overall ETF market.
He said there are two types of active ETFs in the market, those which are thematic in nature, and those which are based around traditional investment strategies.
Malcolm said that while thematic ETFs have been a major source of growth in the wider market in recent years, his firm are focused on expanding the growth of existing strategies, with the creation of new bond ETFs.
Active ETFs are run in the same way as active funds in any other structure, but because they are ETFs, they are listed on a stock exchange and so investors can sell their holdings to other investors directly, rather than, as with an open-ended fund, via redeeming units with the fund manager.
Active ETFs are priced in the same way as equities, that is, a client can see the price instantly, rather than like conventional funds, where a fund is priced once a day.
Malcolm says that in order to manage liquidity, the active ETF portfolios they run at JP Morgan would tend not to be concentrated portfolios.
Data from Invesco shows there were inflows of £38bn into European ETFs in total in the first quarter of 2024, a figure which includes both active and passive products.
Of that £38bn, around 25 per cent of the total, or £9bn, went into fixed income ETFs.
David.Thorpe@ft.com
