[SINGAPORE] JPMorgan Asset Management (JPMAM) registered three active exchange-traded funds (ETFs) in Singapore on Monday (Apr 7), getting the green light to market them to retail investors. The fund rollouts signal its commitment to develop the active ETF segment as a “strategic priority”, said Ayaz Ebrahim, chief executive for Singapore and South-east Asia.
The funds are listed on the London Stock Exchange. To date, there is only one listed active ETF on the Singapore Exchange – the Lion-Nomura Japan Active ETF.
Ebrahim added: “We’re registering it first, and we’ll see the demand over time. A Singapore listing is definitely not off the table. You can say we want to walk before we start running and gauge the appetite first.
The three funds are among JPMAM’s most popular active ETFs – JPMorgan Equity Premium Income Active Ucits ETF; JPMorgan Nasdaq Equity Premium Income Active Ucits ETF; and JPMorgan Global Equity Premium Income Active Ucits ETF. The respective benchmarks are the S&P 500, Nasdaq Composite and MSCI World indices.
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A Ucits vehicle (Undertakings for Collective Investment in Transferable Securities) is more tax-efficient for Singapore and other non-US investors.
Global market
ETFs are fast becoming the “investment wrapper of choice”, based on a PwC study. Global inflows into ETFs in 2024 soared to US$5.2 trillion over the past five years, compared to US$3.2 trillion for mutual funds.
The global ETF market has US$14.6 trillion in assets as at end-2024, and assets are expected to hit US$30 trillion by around 2030. Passive ETFs are still far larger than active ETFs, but the latter accounts for the lion’s share of inflows. Active ETFs have reached US$1 trillion in assets and are expected to triple in size by 2029.
JPMAM’s expectations are even more bullish. It set its sights on managing US$1 trillion in active ETFs by 2029. Philippe El-Asmar, the firm’s head of Asia-Pacific ETF, digital and direct, said: “Active ETFs are growing at two or three times the speed of the rest of the industry. By 2030, we predict that there will be about US$6 trillion of active ETFs, and we hope to get about US$1 trillion of that.” Younger self-directed investors are expected to drive demand.
The premium income strategy involves a call-writing options strategy to generate income. The fund invests in out-of-the-money call options which limit the upside participation in equity markets. In return, the fund collects a premium or income from the options plus a yield from dividends. The target income ranges between 7 and 9 per cent. Stock selection and the call-writing strategy are actively managed. The ETFs’ ongoing charge is 35 basis points.
El-Asmar said: “Our cutting-edge equity premium income ETFs have garnered robust demand from US, European and Asian investors since their inception. The combination of income generation and downside risk management makes them highly appealing to individual and institutional investors.”
He said the strategy is expected to outperform in a sideways or volatile market compared to a straight investment. “The only scenario where these products will underperform a straight investment is if the market’s going up linearly. If investors have a view that the US or global equity markets are going to continue growing in a linear fashion… then they should buy the investments directly.”
The JPMorgan US Equity Premium Income ETF’s track record illustrates this. Year to date, it fell by 4 per cent compared to the S&P 500’s loss of 13.7 per cent. In 2024, the ETF generated a return of 12.5 per cent compared to the S&P 500’s return of 25 per cent.
Morningstar indicated that active ETFs took in roughly US$290 billion in assets in 2024, with US$95 billion coming in the fourth quarter. Roughly 39 per cent of the inflows went to the top 20 ETFs. Six of JPMAM’s ETFs are in the top 20, including two which are newly registered here.