08.12.2021

J.P. Morgan Proposes Converting Select Mutual Funds to ETFs

J.P. Morgan Asset Management has announced plans to convert select U.S. mutual fund vehicles to ETFs in 2022. The conversions, which are subject to fund board approval, are intended to expand J.P. Morgan’s ability to deliver more of its industry-leading investment capabilities in the ETF vehicle, a structure that it believes is well-suited for the four mutual funds currently in scope and will be beneficial to their investors. The combined assets of the funds proposed for conversion are approximately $10 billion (as of 6/30/2021).

J.P. Morgan Asset Management also announced that, in light of continued convergence of mutual funds and ETFs, the boards of the J.P. Morgan mutual funds and ETFs are asking shareholders to elect a common board of 16 to govern the entire J.P. Morgan Fund complex. If approved by shareholders, this change also would take effect in early 2022.

“As one of the fastest growing asset management firms, we are positioning ourselves to deliver our best investment capabilities more rapidly through a broader range of vehicles including mutual funds and ETFs. We also believe the combination of the mutual fund and ETF boards will allow shareholders to benefit from the boards’ substantial combined experience and better position us to deliver the highest value-add capabilities in a rapidly evolving industry,” said George Gatch, Chief Executive Officer, J.P. Morgan Asset Management.

If the boards approve these conversions, which they expect to consider early next year, the following mutual funds would be converted to substantially similar ETFs in an active transparent ETF structure:

  • JPMorgan International Research Enhanced Equity Fund (OEIAX: AUM $5.0BN*)
  • JPMorgan Market Expansion Enhanced Index Fund (OMEAX: AUM $1.1BN*)
  • JPMorgan Realty Income Fund (URTAX: AUM $2.2BN*)
  • JPMorgan Inflation Managed Bond Fund (JIMAX: AUM $1.4BN*)

*AUM as of 6/30/2021

By converting these mutual funds to ETFs, J.P. Morgan would provide clients with active investment options in spaces that traditionally have seen mostly passive ETF solutions.

J.P. Morgan Asset Management is announcing the proposed conversion plans well in advance to provide shareholders and distributors with ample notice of the planned conversions and to allow them time to engage with J.P. Morgan on the implications of this important effort. It is anticipated that if the conversions are approved by the boards of the funds, they would not require shareholder approval prior to implementation.

“As a leading active manager, it is important to us that we continue to deliver our investment capabilities in the vehicle that meets our clients’ desired outcomes,” said Bryon Lake, Head of Americas ETFs. “The intraday liquidity, transparency and potential tax benefits that come with ETFs carry significant value to many investors, and these particular strategies are well suited for the ETF structure.”

“J.P. Morgan is known for its deep investment expertise across asset classes and we want our product offering to be equally diverse – reflecting our broad capabilities across ETFs, mutual funds, separately managed accounts and other structures,” said Jed Laskowitz, Global Head of Asset Management Solutions. “We believe that select, thoughtful conversions have the opportunity to positively impact the shareholders’ experience, and that is always our goal.”

J.P. Morgan Asset Management’s U.S. ETF suite has 36 products with more than $64 billion in assets under management. J.P. Morgan Asset Management ranks as a top ten ETF issuer with respect to AUM and net flows across the active fund and ETF industry for 2021[1]. J.P. Morgan manages 129 mutual funds, with $899 billion in AUM (as of 6/30/21). Our portfolio managers have delivered outstanding performance throughout market cycles, with 79% of our mutual fund AUM ranked in the top two quartiles over the 10-year period (as of 6/30/2021). As a leading active manager in the industry, we are committed to providing access to our investment capabilities through a range of vehicles including ETFs, mutual funds, commingled funds, SMAs and liquid alternatives.

Source: J.P. Morgan Asset Management

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