JP Morgan Asset Management has expanded its line-up of ‘enhanced’ equity ETFs in Europe with the launch of the JP Morgan Global Emerging Markets Research Enhanced Index Equity (ESG) UCITS ETF (JREM LN).
JP Morgan now offers four actively managed enhanced equity index ETFs in Europe, providing exposure to global, US, European and emerging market stocks.
‘Enhanced’ index
The new emerging markets fund provides similar risk characteristics as its performance benchmark – the MSCI Emerging Market Index – while seeking to provide an enhanced level return through incremental active management.
The fund harnesses insights from over 30 JP Morgan emerging markets research analysts to seek an information advantage versus purely passive approaches.
The JPM portfolio managers take a large number of small active positions in stocks – overweighting positions in stocks the analysts find attractive and underweighting positions in the stocks they don’t – thereby seeking modest positive excess returns, compounded over time.
Typically, enhanced equity index funds aim to achieve about 0.75%-1.00% of annualised excess returns with tracking error of approx 0.75%-1.25% versus their benchmarks.
The portfolio managers also integrate a systematic consideration of ESG investment principles into the portfolio management process; companies involved in certain socially and ethically questionable sectors, such as controversial weapons manufacturers and tobacco, are excluded.
The fund comes with a total expense ratio (TER) of 0.30%. It has been listed on the London Stock Exchange, Xetra, and Borsa Italiana.
JP Morgan rolled out its first enhanced index active equity ETFs in Europe in October with the launch of three funds providing exposure to portfolios of global, US, and European stocks.
These three funds are the JPM Europe Research Enhanced Index Equity (ESG) UCITS ETF (JREE LN), benchmarked against the MSCI Europe; the JPM US Research Enhanced Index Equity (ESG) UCITS ETF (JREU LN), benchmarked against the S&P 500; and the JPM Global Research Enhanced Index Equity (ESG) UCITS ETF (JREG LN), benchmarked against the MSCI World.