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JPMorgan to Offer Lowest-Fee ETF With US Stock Market Exposure

Zacks Equity Research
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JPMorgan Chase JPM has announced that the JPMorgan BetaBuilders U.S. Equity ETF, which will make its debut tomorrow, is expected to have a fee of 0.02%. With this, the company will launch America’s lowest-fee exchange-traded fund yet to be offered, pushing the fee war to lower levels.

By reducing the expense ratio, the bank is willing to sacrifice on the immediate fee revenues in order to draw attention to itself and cause a stir in the ETF market.

To date, ETFs with similar exposure in the United States — including the ones offered by BlackRock, Inc. BLK and The Charles Schwab Corporation SCHW — have been the lowest-fee offerings, charging 0.03%. Moreover, while Vanguard Group recently lowered the fee for some of its ETFs to 0.03%, most of the ETFs offered by the company, with similar exposure, have been charging 0.04%.

Despite this new low of 0.02%, some are not satisfied. Various ETF market analysts were of the opinion that JPMorgan would launch a zero-fee ETF, which anyway does not seem unreal in today’s time.

Notably, the online lender, SoFi recently filed for a zero-fee ETF. It wants to start two new funds, which do not charge any fee for at least the first year. However, while SoFi is preparing to waive the fee, it is not making the funds permanently free.

Despite being a new issuer for such offerings, JPMorgan has been successful in making its mark within the ETF markets. The company sold its first ETF in 2014.

However, there is speculation that the bank has an edge over others in launching ETFs. People are of the opinion that the bank can easily market ETFs to its in-house network of clients, including its private bank. It is believed that the rise in the company’s ETFs over the past several years has been because of use by its own client base.

Per The Wall Street Journal, $15.6 billion that was raised by JPMorgan’s ETFs in 2018 were mostly from its affiliates. In fact, by 2018 end, the company’s affiliates owned nearly 53% of its ETF assets.

In the past year, shares of JPMorgan have lost 9%. The stock currently carries a Zacks Rank #3 (Hold).

A better-ranked stock from the same space is Comerica Incorporated CMA. Its shares have gained nearly 16% over the past three months. Its Zacks Consensus Estimate for current-year earnings has been revised 2.4% upward over the past 60 days. The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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