JPMorgan ups its ETF game

JPMorgan ups its ETF game
Two of its BetaBuilder funds saw big inflows last week.
JUL 17, 2018

JPMorgan Chase & Co. is finally gaining ground in the competitive ETF landscape with its BetaBuilder brand. Two of the lender's exchange-traded funds — the JPMorgan BetaBuilders Japan ETF (BBJP) and the JPMorgan BetaBuilders Europe ETF (BBEU) — saw strong inflows last week after stagnating since their inception last month. The Japan fund took in $654 million, while the Europe fund absorbed $187 million over the five days ended July 13, both of which are records, albeit over a very short time frame. JPMorgan launched its BetaBuilder ETFs on June 18, bringing out three portfolios designed to compete with BlackRock Inc. and Vanguard Group Inc. The lender came in cheap, charging 30 basis points less for BBJP than the iShares MSCI Japan ETF and 51 basis points less for BBEU than the iShares Europe ETF. The funds are roughly the same price as similar offerings from Vanguard. "You have to rip the Band-Aid off and play the fee-war game, because investors demand things cheap," said Bloomberg Intelligence analyst Eric Balchunas. (More: BlackRock sees outflows from equity products)​ In February, market rumors had suggested that JPMorgan was looking to buy an ETF business to boost its presence in the $3.5 trillion market. But with BetaBuilders it's now growing fast despite the competitive hurdles banks typically face when going up against major money managers' core products. If the $665 million BBJP "takes in another $350 million between now and the end of summer, it will beat Bill Gross's fund as the second-fastest ETF to hit $1 billion," Mr. Balchunas said. The Pimco Active Bond Exchange-Traded Fund (BOND) now has $2.1 billion in assets. Still, despite the inflows into JPMorgan's funds, Vanguard and BlackRock's funds tracking European and Japanese equities are behemoths, with more than $37 billion in combined ETF assets. So JPMorgan has a lot of catching up to do, and the low-cost route will probably remain its best way in. When it comes to building an ETF business, that often is the only solution. As for last week's activity, it's likely that the shares created on Friday, when the Japan ETF had $456 million of inflows and the Europe fund received $113 million in new capital, were for one investor, according to Josh Lukeman, head of ETF market making for the Americas at Credit Suisse Group. "It's not too uncommon for an issuer to design a product around an idea or request from a very large client," he said. (More: Goldman Sachs poses new threat to active mutual fund managers)

Latest News

&Partners taps two UBS leaders to run its private wealth business
&Partners taps two UBS leaders to run its private wealth business

Mara Glassel and Julie Fox will co-lead the fast-growing hybrid RIA’s ultra-high-net-worth and private wealth businesses.

Citi sees Q3 profit jump as wealth unit books record $38B in net new assets
Citi sees Q3 profit jump as wealth unit books record $38B in net new assets

The banking giant's wealth arm extends its revenue streak as it pushes to exit consent orders weighing on growth since 2020.

Retirement plan defaults leave key participant decisions unresolved
Retirement plan defaults leave key participant decisions unresolved

New Allspring research finds 401(k) participants want guidance on income and rollovers, not just portfolio automation.

Global equity release market set to triple, with US leading growth
Global equity release market set to triple, with US leading growth

Aging homeowners hold record housing wealth - but most advisors still aren't bringing it into retirement plans

Retiree alleges advisor withheld $600K through real estate LLC web
Retiree alleges advisor withheld $600K through real estate LLC web

$1.7M invested from an inheritance. Then the phone went dead.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor