J.P. Morgan Muscles in on the ETF Industry
This article was originally published on ETFTrends.com.
JPMorgan Asset Management's exchange traded fund business saw sales increase tenfold as it tries to muscle out some of the more stalwart players in the ETF industry.
The Wall Street bank offered some of the best-selling newly launched ETFs of 2018, redoubling efforts to regain market share lost to BlackRock and Vanguard over the past decade, the Financial Times reports.
ETF investors funneled $16.8 billion into JPMorgan Asset Management ETFs in 2018, comopared to the $1.6 billion in inflows over 2017. The net inflows into JPMorgan ETFs also outpaced new ETF business in 2018 for both State Street at $6.6 billion and Invesco $6.8 billion combined.
In 2018, JPMorgan was the fifth best selling ETF issuer last year, behind Vanguard, BlackRock, Nomura and Charles Schwab.
“We expect to see substantial growth for ETFs over the next decade. We have spent a lot of time building the right teams, infrastructure and processes to compete in this space,” Bryon Lake, head of international ETFs at JPMAM, told the Financial Times.
Among JPMorgan's most popular new ETF launches last year, the JPMorgan BetaBuilders Japan ETF (BBJP) attracted $3.6 billion in net inflows, JPMorgan BetaBuilders Europe ETF (BBEU) brought in $2.6 billion in inflows, JPMorgan BetaBuilders Developed Asia-ex Japan ETF (BBAX) added $2.9 billion and JPMorgan BetaBuilders Canada ETF (BBCA) experienced $1.1 billion in inflows.
JPMorgan was late into the ETF game as the money manager historically dabbled in active management and its alternatives business, which puzzled many industry observers as the company's $2 trillion in assets and wealth management business covers services for a range of U.S. financial advisors and retail investors whom have exhibited increased demand for ETFs since the financial crisis.
“JPMorgan has the resources and expertise to be a significant competitor in the ETF industry but it has allowed its rivals to build a lead that will require intensive efforts to recover," Deborah Fuhr, co-founder of ETFGI, told the Financial Times.
In a saturated market, JPMorgan is forgoing the broad beta-index approach and may be focusing more on targeted investment opportunities.
“It is not going for vanilla ETFs. This allows JPMorgan to retain some pricing power. Their model is different from Charles Schwab, which offers simple ETFs at bargain basement fees to compete with BlackRock and Vanguard,” Warren Miller, founder of Flowspring, told FT.
For more information on the ETF industry, visit our ETF performance reports category.
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