J.P. Morgan’s first ETF, the JPMorgan Diversified Return Global Equity ETF (NYSEArca:JPGE) , debuts today and the new fund will benchmark to a FTSE Group index.
Designed to be a global core equity allocation tool for investors, the JPMorgan Diversified Return Global Equity ETF is comparable to several other new ETFs that have recently debuted in that it uses a factor-driven approach.
“The fund is designed to provide market participation with lower volatility, and starts with the premise that traditional market-cap weighted and single-factor indices expose investors to excessive risk concentrations and a systematic bias toward overvalued securities. Therefore, the fund seeks to reallocate risk by weighting stocks according to four factors: value, size, momentum and low volatility. Research has shown that these factors, when combined, may offer better risk-adjusted returns,” said J.P. Morgan Asset Management in a statement.
The new ETF tracks FTSE Developed Diversified Factor Index, further cementing FTSE status as a rapidly growing provider of indices to North American-listed ETFs. [FTSE's Growing U.S. Presence]
Including the new JPGE ETF, there are 112 equity and fixed income ETFs tracking a FTSE benchmark available to investors in North America. As of May 31, 2014, there was a combined AUM of $145 Billion in ETF assets benchmarked to FTSE indices in North America, said FTSE in a statement.
FTSE is also the index provider for an array of well-known ETFs including the Vanguard FTSE Emerging Markets ETF (VWO) , the largest emerging markets ETF by assets. The iShares China Large-Cap ETF (FXI) , the largest and most heavily traded China ETF, also tracks a FTSE index.
The new ETF is managed by an experienced J.P. Morgan team, with 18-year veteran Beltran Lastra as the lead portfolio manager. Lastra’s team currently manages $12 billion in AUM globally, according to the bank.
The FTSE Developed Diversified Factor Index allocates almost 31% of its weight to U.S. stocks with another 22.4% going to Japanese equities, according to provider data. No other countries receive double-digit weights in the index. The consumer goods, consumer services and health care sectors combine for over 37% of the index’s weight.
ETF Trends editorial team contributed to this post.
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