JP Morgan Asset Management has launched a new actively managed ETF in Europe offering diversified exposure to global fixed income through the firm’s time-tested aggregate bond strategy.
Travis Spence, Head of EMEA ETF Distribution at JP Morgan Asset Management.
The JPMorgan Active Global Aggregate Bond UCITS ETF has been listed on London Stock Exchange in US dollars (JAGG LN) and pound sterling (JAGD LN) as well as on Deutsche Borse Xetra in euros (JAGG GY).
Benchmarked against the Bloomberg Global Aggregate Index, the ETF is designed to serve as a core fixed income allocation covering a wide opportunity set spanning government, corporate, government-related, emerging market, and securitized bonds across 25 local currency markets.
JP Morgan initially applies certain ESG criteria to the universe, excluding companies involved in controversial sectors, including weapons and thermal coal, as well as firms in violation of internationally accepted norms like the UN Global Compact and the OECD Guidelines for Multinational Enterprises.
Beyond these screens, JP Morgan employs a research-driven methodology aimed at long-term outperformance. The approach takes into account a blend of fundamental, quantitative, and technical factors across countries, sectors, and issuers. Portfolio construction is both top-down and bottom-up, aiming to harvest diversified sources of return through tactical moves like sector rotation and yield curve positioning.
The ETF comes with an expense ratio of 0.30% and is classified as an Article 8 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).
According to JP Morgan, the sheer size and complexity of the Global Aggregate universe makes a compelling case for active management.
Furthermore, the firm argues that active strategies are particularly well-suited to fixed income ETFs in general as the composition of traditional bond indices is driven by the largest issuers which are not necessarily the most “successful” issuers. This means where a passive ETF will typically drift towards the largest issuers over time irrespective of the quality of their balance sheets, an actively managed fixed income ETF can allocate towards higher-quality issuers and away from those that could be at risk for downgrades, helping to preserve capital and returns in times of economic or market stress.
Travis Spence, Head of EMEA ETF Distribution at JP Morgan Asset Management, commented: “Active fixed income ETFs can capitalize on numerous factors that impact bond prices and move markets, including economic and market cycles and central bank actions across both government and corporate securities. An active strategy can adjust interest rate exposure and sector allocation through the cycle, enabling investors to own cheaper securities and underweight expensive ones while maintaining a stable bond beta.
“Our Global Aggregate strategy’s time-tested process has delivered strong returns since inception in 2009 while retaining the key features of a core bond portfolio, including low volatility, limited drawdowns, and no market bias. We’re delighted to be bringing this capability to the ETF wrapper as well as offering clients the industry’s first UCITS active global aggregate bond ETF.”