Marketing Communication
Katherine Magee, Investment Specialist in J.P. Morgan Asset Management’s US Equities business
Jill Rootsaert, Head of ETF Distribution for Benelux at J.P. Morgan Asset Management
The U.S. market has been leading in ETFs, but there’s a growing interest in this space in Europe as well, even if the client types are different. J.P. Morgan Asset Management has launched a quarterly “Guide to ETFs” publication to help investors navigate the ETF landscape and shared the latest news about an innovative range that aims to provide consistent monthly income while lowering risk.
Globally, ETF assets total around $15 trillion as of end January 2025, with net flows of around $144 billion over the last year, bringing the 15th year of consecutive net flows. While the U.S. market dominates in terms of assets (70%), the European market represents around 15% of the global ETF landscape.
“In the U.S., ETFs are much more embraced by retail investors and it is a more dispersed market,” Jill Rootsaert, executive director and head of ETF distribution at J.P. Morgan Asset Management for Benelux, explains. “For the European market, the demand has been driven by professional clients over the last decade, but we’ve seen a growing interest from retail investors, also thanks to the push of ‘finfluencers’ and next-generation thinking in terms of retirement.”
Among the other trends revealed in the “Guide to ETFs” is the growth of active ETFs. “The fact that the five-year CAGR for active UCITS ETFs has been at 35%, whilst the five-year CAGR for all UCITS ETFs is 19% means this is not the song of the day,” Rootsaert adds. “This is a structural trend that’s going to continue. And we know that with current markets, volatility is here to stay, and that means people are embracing active strategies in order to reposition their portfolios.”
Active vs. passive
While the lion’s share of AUM in the overall ETF space has been in passive, active ETFs are growing. Over the last 12 months, 82% of total U.S. ETFs launched were active, compared to merely 24% in UCITS ETFs. However, with new players entering the active ETF market also in Europe, there has been an uptick already since January in new launches. Of course, “you need to launch a product before you can get assets in it; however, we expect this to be a driver in active ETF flows in Europe as well,” Rootsaert says.
Executive director and investment specialist in U.S. equities at J.P. Morgan Asset Management, Katherine Magee adds that the ETF industry has expanded primarily due to passive index tracking vehicles which provide scalability and intraday transparency. “But we’re seeing an evolution in the realisation that this is quite a useful vehicle, but it’s just that: a vehicle. We can offer the same advantages for active strategies through the ETF wrapper,” she explains.
Magee predicts there will be more ETFs and assets in the active category, and clients are keen on the uptake. Additionally, “even in a market like the S&P 500, one of the most widely traded, we still see opportunity for active management and could outperform the benchmark particularly when there is lower correlation across stocks.”
Innovative range
J.P. Morgan Asset Management is leading the active ETF space both in terms of products as well as in AUM as of end January 2025, with 35 active UCITS ETFs totalling $32.2 billion in AUM. It started building this platform in 2017-18. Both Magee and Rootsaert attest to the fact that there are very deliberate strategies backing those figures coupled with the desire to deliver good products.
Rootsaert adds a few aspects that stand out: “Weare known as an active investor, it’s part of our DNA. Through active ETFs, clients get access to our fundamental analysts—the same ones they have known throughout the years for managing mutual fund strategies. We are leaders in fundamental research, unlike other players that are more systematic. We are vehicle agnostic, it is the choice of the client.”
Among the newer innovations to the ETF offering is the Equity Premium Income (EPI) range, “based around two ETFs we already have in the U.S. market, one of them being the world’s largest active ETF. We’re really excited to bring those exact ETFs to the UCITS space with JEPG, JEPQ and JEPI,” Magee says. The funds have income targets of 7-9%, 9-11% and 7-9% respectively*.
The objective is to generate income for clients through three sources of return: 1) potential alpha from the research enhanced index strategy 2) dividend yield from the stocks held in portfolio 3) income generated from options overlay strategy.
The range also targets lower volatility than their respective benchmarks, limiting downside risk and benefiting from 80 fundamental research analysts doing bottom-up stock research in their respective industries.
Source: J.P. Morgan Asset Management as of 31/1/25. *These targets are the investment manager’s internal guidelines only to achieve the fund’s investment objectives and policies as stated in the prospectus. The targets are gross of fees and subject to change. There is no guarantee that these targets will be met.
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This communication is issued in Europe (excluding UK) by JPMorgan Asset Management (Europe) S.à r.l., 6 route de Trèves, L-2633 Senningerberg, Grand Duchy of Luxembourg, R.C.S. Luxembourg B27900, corporate capital EUR 10.000.000.
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