JP Morgan launches intermediate municipal bond ETF

Nov 1st, 2018 | By | Category: Fixed Income

JP Morgan Asset Management has launched the JPMorgan Municipal ETF (JMUB US) on Cboe BZX, providing actively managed exposure to intermediate-term municipal bonds.

Richard Taormina, head of the tax aware strategies team at JP Morgan Asset Management.

Richard Taormina, head of the tax-aware strategies team at JP Morgan Asset Management.

The fund may suit investors looking for regular income free from federal taxation.

“Historically, intermediate-term bonds tend to offer diversification and counterbalance when equities decline,” said Richard Taormina, head of the tax aware strategies team at JP Morgan Asset Management.

“JMUB is a great option for investors looking for a steady income stream and can potentially offer less downside risk in a volatile market environment.”

JMUB leverages the expertise of JP Morgan’s Municipal Bond and Global Liquidity business with over 145 dedicated investment professionals and 30 years of experience across market cycles.

The ETF’s prospectus does not indicate a target duration for the fund but does say that it will maintain an average dollar-weighted maturity between three and ten years under most market conditions.

The fund, which currently contains over 300 holdings, will focus on investment-grade municipal securities but has the ability to tactically enter the high-yield municipal space (up to a limit of 10% of the total portfolio) as opportunities emerge. It may invest in a range of municipal securities including municipal obligation bonds up to a limit of 25%.

The fund’s managers take a long-term approach to security selection, seeking investments that they believe will perform well over full market cycles. The prospectus notes the strategy is value oriented and purchases securities after evaluating interest rate risk, credit risk, duration, liquidity and the complex legal and technical structure of the transaction.

The ETF comes with a net expense ratio of 0.24% due to a contractual fee waiver in place until at least November 2021. Its gross expense ratio is 0.47%.

JMUB joins the recently launched JPMorgan Ultra-Short Municipal ETF (JMST US). JMST is also actively managed and offers targeted exposure to ultra-short municipal bonds. Its expense ratio is 0.18%.

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