J.P. Morgan Asset Management Expands Active ETF Offering to Emerging Markets Equities and Bonds

• First active ETF for local currency bonds expands the range to 14 actively managed bond ETFs
• Addition of REI SRI strategy, managed according to the Paris Climate Agreement criteria, to include an emerging markets equity offering

With the JPM Emerging Markets Local Currency Bond Active UCITS ETF (Ticker: JLOC), J.P. Morgan Asset Management expands its offering to 14 actively managed bond ETFs across market segments including aggregate bonds, government, corporate, and high-yield bonds, ultra-short income, and sustainable bond ETFs. The range of EU SFDR Article 9-classified equity ETFs now also focuses on emerging markets equities with the new JPM Global Emerging Markets REI Equity SRI Paris Aligned Active UCITS ETF (Ticker: JSEM), complementing existing global, European, and U.S. equity offerings.

Benefiting from Longstanding Local Currency Expertise

The JPM Emerging Markets Local Currency Bond Active UCITS ETF (JLOC) is the first active ETF to invest in emerging markets local currency bonds. It aims to outperform the JPMorgan Government Bond Index – Emerging Markets Global Diversified Index, a widely recognized industry benchmark, through active allocation in emerging markets (EM) bonds and currencies. The active ETF is based on J.P. Morgan Asset Management’s proven local currency bond strategy, established in 2008, with seasoned local currency specialists Didier Lambert, Julien Allard, and Ishitaa Sharma as portfolio managers. They are supported by J.P. Morgan Asset Management’s team of over 70 dedicated EM bond investment professionals managing more than $43 billion in EM bonds.

By leveraging insights from fundamental research, JLOC captures the specific return opportunities of local currency bonds, enabling diversification of bond portfolios. Additionally, higher nominal and real yields, as well as enhanced total returns, are achievable. JLOC provides simple and flexible access to an asset class with a market size of $5 trillion, which has grown by 700 percent over the past two decades (Source: J.P. Morgan). The ETF has a total expense ratio (TER) of 45 basis points.

Investing Sustainably in Emerging Markets Companies

With the JPM Global Emerging Markets REI Equity SRI Paris Aligned Active UCITS ETF (JSEM), the successful Research-Enhanced Index (REI) series with a sustainability focus now grows to four active equity ETFs. The goal is to achieve long-term returns that exceed the tailored MSCI Emerging Markets SRI EU Paris Aligned Benchmark Overlay ESG Custom Index, aligned with the Paris Climate Agreement criteria. The JSEM portfolio comprises 450 to 500 positions, filtered from the emerging markets equity universe based on leading ESG companies, exclusions, and adjustments per the benchmark. Both the benchmark universe and the ETF are designed to emit at least 50% fewer greenhouse gases than the MSCI Emerging Markets universe and decarbonize by an average of 7% annually.

Led by Lina Nassar and Sonal Tanna, JSEM utilizes J.P. Morgan Asset Management’s established 30-year active REI investment process. The active, bottom-up-driven stock selection process slightly overweights stocks with the highest potential and underweights those deemed overvalued. The investment team leverages insights from over 90 research analysts covering approximately 2,500 companies globally. They also collaborate closely with the team of more than 40 sustainable investment experts. The sustainable REI SRI ETF series has now grown to over $900 million. JSEM’s TER is 30 basis points.

“With these two new active ETFs, we are expanding our suite of core building blocks to help investors achieve their portfolio goals and sustainability preferences,” emphasized Travis Spence, Global Head of ETFs at J.P. Morgan Asset Management. He added: “JLOC offers the first active bond ETF focused on emerging markets local currency bonds, enabling more positive risk-adjusted returns through active management in this segment. JSEM, on the other hand, is designed to help investors meet their decarbonization goals.”