JPMorgan Chase & Co. announced in a pair of filings with the Securities and Exchange Commission that it plans to introduce a pair of exchange-traded funds.
The New York company wants to introduce both actively managed and index-based ETFs, according to the filings made with the SEC on Wednesday.
The company plans to launch its first actively-managed ETF later this year that would invest in about 300 domestic large-cap stocks. For such actively managed ETFs, JPMorgan Chase wants to be able to have funds that can hold stocks, bonds, open end funds, closed end funds and unit investment trusts.
The company is also interested in a pair of index-based ETFs. They want one that tracks an index of investment-grade U.S. municipal bonds with maturities between one and 12 years, and another that will track investment-grade U.S. corporate debt with an issuance of at least $300 million.
Despite the market turmoil in the past few years, ETFs have remained a hot sector. Assets held in domestic exchange-traded funds rose 2.9% in February to $752 billion, according to State Street Global Advisors monthly report, as 13 companies launched their first ETFs.
As of Feb. 28, 856 ETFs were managed nationally by 31 asset management companies. The top three managers collective accounted for 83.8% of the U.S. listed ETF assets under management. As of Feb. 28, BlackRock [BLK], which bought the iShares family of funds from Barclays, managed 48.1% of assets, State Street [STT] had 23% share, and Vanguard 12.7%.
Despite this overwhelming majority, the share of total ETF assets held by these three managers declined 0.5% in February as smaller providers continued to gather assets.
Other companies, including Baltimore’s Legg Mason, [LM] have begun the process of filing with the SEC to offer actively managed ETFs. Legg Mason has not yet decided what strategy its first actively managed ETF will take, but the company said it is looking at fixed income and equity strategies and is not planning on cloning any existing funds.
In addition to ETFs, JPMorgan Chase’s mutual fund arm, J.P. Morgan Funds, has been looking for other ways to beef up distribution. The unit increased its assets under management 6.97% last year to $445 billion and now it has its sights set on developing more assets through banks. Last month, it announced it hired John Holcombe Boyd, the director of wealth management services for T. Rowe Price’s [TROW] third party distribution division, as a senior relationship manager who will focus on increasing distribution through banks and trust departments.
J.P. Morgan Funds had $26 billion of inflows into long-term funds last year, according to Strategic Insight, and it had $2 billion in inflows in January, again trailing both Pimco and Vanguard. J.P. Morgan Funds closed January as the tenth largest long-term mutual fund provider, according to Morningstar Inc. [MORN], with $95 billion in fund assets under management.