JP Morgan Asset Management (JPMAM) has launched an active global equity premium income ETF to act as a buffer for investors during volatile markets, ETF Stream can reveal.
The JPMorgan Global Equity Premium Income UCITS ETF (JEPG) is listed on the London Stock Exchange and Euronext Milan with a total expense ratio (TER) of 0.35%.
It will also list on Deutsche Boerse on 7 December and the SIX Swiss Exchange on 20 December.
JEPG is a global equity version of the group’s hugely popular US-listed JPMorgan Equity Premium Income ETF (JEPI), a US-equity strategy that has amassed $30bn assets under management (AUM) since launching in May 2020.
JEPI has seen $13bn inflows this year, according to ETF.com data, as investors look to buffer their portfolios from potential market volatility in a high-interest rate environment.
JEPG offers investors a consistent income of 7-9% a year, paid monthly, while delivering less volatility versus its benchmark, the MSCI World index.
For example, the strategy is designed to provide higher income during spikes in volatility in a bid to cushion investors against fluctuating prices.
The active element of the ETF will see portfolio managers Piera Elisa Grassi and Nicolas Farserotu take small overweight and underweight positions in companies versus the index.
Income will then be generated using an options strategy, selling index options on the S&P 500 and MSCI EAFE – developed markets outside the US and Canada – against JEPG’s portfolio.
The options strategy will be managed by JPMAM’s equity solutions team, headed up by Hamilton Reiner who also oversees JEPI.
JPMAM said JEPG can “complement or substitute” existing yield-paying strategies, offer a conservative equity exposure and act as an alternative source of income to high-yield bonds with equity instead of duration risk.
Travis Spence (pictured), head of ETF distribution in EMEA at JPMAM, commented: “Investors continue to seek high levels of income, but they also want exposure to stock markets with less volatility.
“We have seen the rapid growth of our option overlay equity strategies in the past couple of years, and we are delighted to be bringing a global premium income version of our market-leading US-domiciled equity premium income strategy to the UCITS ETF market.”
It is the latest ETF that aims to buffer investors from the downside risks of equities to hit the European market this year.
Global X launched two targeting the S&P 500 in February while First Trust expanded its target outcome suite with the launch of a second active S&P 500 buffer ETF.
In October, JPMAM expanded its fixed income range with the launch of the JPM Active Global Aggregate Bond UCITS ETF (JAGG).
