JP Morgan launches ultra-low-cost US equity ETF in Europe

Apr 10th, 2019 | By | Category: Equities

JP Morgan Asset Management has launched a new ETF in Europe with the expansion of its ‘BetaBuilders’ range – low-cost, passively managed ETFs marketed as portfolio building blocks.

Bryon Lake, International Head of ETFs at JP Morgan Asset Management

Bryon Lake, Head of International ETFs at JP Morgan Asset Management.

The JPM BetaBuilders US Equity UCITS ETF offers exposure to the large- and mid-cap segments of the US equity market by tracking the Morningstar US Target Market Exposure Index.

The fund matches the cost of Europe’s lowest priced ETF – the Lyxor Core Morningstar US UCITS ETF (LCUD LN) – with a total expense ratio (TER) of just 0.04%.

Bryon Lake, Head of International ETFs at JP Morgan Asset Management, said, “We believe our US equity ETF offers investors and asset allocators more efficient access to US equities in what is an increasingly noisy market place. Our BetaBuilder ETF suite is designed to offer clients efficient access to market cap-weighted building blocks that are simple, straightforward, and priced for today’s market.”

The fund is available in distributing and accumulating share classes and has been listed on London Stock Exchange in US dollars (dist: BBUD LN; acc: BBUS LN) and pound sterling (BBDD LN; BBSU LN) as well as on Borsa Italiana (BBUD IM; BBUS IM) and Deutsche Boerse Xetra (BBUD GY; BBUS GY) in euros.

According to JP Morgan, currency-hedged versions of the ETF will be introduced in the near future and will be offered with the same low price tag of just four basis points.

The fund is the first BetaBuilders equity ETF to be launched in Europe with the brand currently consisting of three fixed income ETFs offering low-cost exposure to government bonds denominated in US dollars, pound sterling, or euros.

The BetaBuilders suite in the US is more extensive and includes funds targeting the equity markets of Europe, Canada, Japan, and developed Asia ex-Japan, as well as US-listed REITs. It is yet unclear whether JP Morgan plans on bringing any of these strategies to Europe.

Competition amongst European ETF providers to offer ultra-low-cost ETFs, often branded ‘core’ strategies, is certainly heating up, driven by strong inflows into such products as investors seek to reduce the drag of fees on portfolio performance.

Lyxor rolled out its own low-cost core line-up in March 2018 with the majority of funds coming with TERs of around 0.07%. Meanwhile, BlackRock sought to combine two of the hottest themes in the ETF industry by expanding its core ETF range with a suite of ESG-focused funds. Most recently, however, Amundi launched a suite of nine ultra-low-cost ETFs – branded ‘Prime’ – that charge a flat fee of just 0.05% across the entire range.

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