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With an aim to provide access to its sophisticated alternative investment strategies to a broader client base, JPMorgan Chase & Co. JPM is reducing the minimum requirement for participating in various alternative investment strategies that the company’s asset-management arm offers.
Per a Bloomberg report, the new limit has been set at $100,000, down from the previous requirement of $10 million. This reduction will increase access to certain J.P. Morgan Global Alternative strategies to the masses, which was restricted earlier only to institutions and the ultra-rich.
For this, J.P. Morgan Asset Management, the asset management arm of the bank, has agreed to use the technology of iCapital Network Inc.
iCapital is a financial technology platform that offers alternative investments like hedge funds, private equity and real estate to high net worth individuals and other wealth advisors at lower minimums, thereby simplifying access to such investments for investors.
Per the agreement, J.P. Morgan Asset Management will partner with iCapital so that high net worth investors and their advisors can access certain J.P. Morgan Global Alternative strategies by using iCapital’s digital platform.
Anton Pil, Managing Partner of J.P. Morgan Global Alternatives said, "As we get later in the economic cycle, identifying alternative sources of return is an essential consideration for investors looking to build stronger portfolios. Institutional clients have long embraced alternatives as a strategic part of their asset allocation, and many high-net-worth investors continue to be under-allocated to alternatives relative to their institutional counterparts."
He added, "Given the current rising interest rate environment, investors are looking for alternative sources of income that provide diversification to broader fixed income markets, and as a result, we are starting with several of our income-focused Alternative Investment strategies."
By using such technological platforms, high net worth individuals will also be able to build portfolios without relying on the brokers for advice. This will reduce their investment costs as brokers charge commissions, which increases investors’ total expenses.
Apart from JPMorgan, BlackRock, Inc. BLK works with iCapital. UBS Group AG UBS and Morgan Stanley MS have also been found to have an interest in the venture.
Shares of JPMorgan have gained 33.2% in the past year, outperforming 20.4% growth of the industry.
JPMorgan currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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